When quality stocks go on sale, it can be an excellent time to buy, particularly for investors who are planning to hang on for the long term. While you shouldn't necessarily try to time the market, it can be a good idea to keep a list and track quality stocks in the event that they drop in value.
Microsoft (MSFT 0.73%) is a stock that has been doing poorly this year, and it may have many investors wondering about whether it's a good value buy these days. Its sell-off this year has been noteworthy because the stock has typically been a much safer buy in the past. So what's going on with Microsoft? Why is the tech stock doing so badly, and is it heading lower, or could now be a great time to buy?
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Why has Microsoft's stock been tanking this year?
It hasn't been a typical year for Microsoft's stock by any stretch. Although it's still a top name in tech and has a market cap of around $3 trillion, making it one of the most valuable companies in the world, through the first two months of 2026, it has lost around 19% of its value. You have to go back to the Great Recession in 2008 to find the last time it did worse than this. Back then, it declined by nearly 22% after just the first two months of the year.
Back then, the economy was in the midst of a significant recession. These days, people may simply be anticipating a recession. Microsoft's stock entering the year trading at an inflated valuation certainly didn't help matters, either. Paying close to 35 times earnings for the stock did make it an expensive-looking stock, especially when you consider that the company's growth rate has normally been less than 20%. While that's still solid, that kind of growth may not be high enough to warrant that much bullishness. Thus, a decline may not be all that surprising, and I think a correction may have even been a bit overdue for Microsoft's stock.
NASDAQ: MSFT
Key Data Points
Is now a good time to buy Microsoft stock?
Today, Microsoft's valuation is a bit more reasonable, as the stock trades at just 25 times its trailing earnings, and based on analyst expectations, its forward price-to-earnings multiple is 21. That's more in line with the S&P 500 average.
While many people may have doubts and question marks about its AI strategy and whether Copilot will pay off, the great thing about Microsoft is that it has a plethora of growth opportunities it can tap into. And with deep pockets (the company has generated $119 billion in profit over the past 12 months), it's not the type of business that investors need to worry about.
Microsoft's stock is down, but for investors, that can be great news, as it allows you to buy shares of this terrific company at a much lower price.
