1 "Magnificent Seven" Stock You'll Regret Not Buying During the Dip

The "Magnificent Seven" is a name given to Apple, Microsoft (NASDAQ: MSFT), Nvidia, Amazon, Alphabet, Meta Platforms, and Tesla because of their impact on the market over the past few years. Unfortunately, the "Magnificent Seven" hasn't been so magnificent in recent weeks, with all seven down year to date.

There are various reasons for their individual struggles, but they experienced a collective decline after President Donald Trump's new tariff plan was announced.

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Having the Magnificent Seven stocks slump isn't ideal because they account for a lot of many major indexes (especially the S&P 500), but it does present investors with a good opportunity to buy great companies at a "discounted" price.

Of all the Magnificent Seven stocks that have slumped, Microsoft is one you'll regret not buying at current prices. Let's take a look at why.

How the new tariffs could affect Microsoft's business

First, let's talk about the potential tariff impact on Microsoft's business.

Like many other big tech companies, Microsoft relies heavily on imported electronic parts and raw materials. This goes for its consumer electronics as well as for the data centers that it needs to run its cloud platform, Azure. These data centers require networking equipment, servers, and other equipment, which Microsoft imports from countries like China, South Korea, and Taiwan.

These parts will likely become more expensive, giving Microsoft three options: pass on the costs to customers, absorb the extra costs themselves, or delay or cancel data center expansion plans.

Even before the tariff announcement, Microsoft pulled back from some data center expansion plans in the U.S. and Europe, so it's not farfetched for it to choose that route. If it decides to absorb the higher costs, its profit margins give it some breathing room to determine the better long-term option.

MSFT Profit Margin (Quarterly) data by YCharts

Microsoft Azure is Microsoft's growth engine

I focused on the increased costs relative to Microsoft's data centers because of how important Azure is for its business growth.

In the second quarter of its fiscal year 2025, Microsoft's Intelligent Cloud segment (which includes Azure) generated $25.5 billion in revenue. That was a 19% year-over-year increase and over 36% of Microsoft's total revenue.

Azure is firmly in second place in cloud service market share, trailing Amazon Web Services (AWS), but its growth has been impressive. It likely won't pass AWS in market share any time soon, but it has been chipping away, highlighting how competitive Azure has become as a cloud platform.

The cloud services industry is still relatively young and has much more room to expand as companies shift more of their operations to the cloud. As this happens, Azure should continue to drive a lot of Microsoft's growth.

Microsoft's business is the most recession-resistant of the Magnificent Seven

Through decades of expanding into different industries, Microsoft built the most thorough ecosystem in the big tech world. It has consumer and enterprise electronics, consumer and enterprise software, cloud services, social media, and gaming.

When the economy hits a rough patch, you want to invest in businesses that can generate consistent and recurring revenue, and Microsoft has that. Maybe more important, though, is the number of enterprise and corporate clients Microsoft has.

Corporations are less likely to cut spending on vital software or electronics than your everyday consumer, who may be pressed for cash. This can help keep Microsoft's financials consistent, even when there's a pullback on spending. That doesn't mean Microsoft won't see a slight slowdown, but its revenue is more stable and predictable, especially in the long term.

MSFT Revenue (Quarterly) data by YCharts

Don't forget about Microsoft's dividend

Rarely do people look at Microsoft and think about its dividend, but it has been paying one since 2003. Microsoft's stock price has shot up since then, so its dividend yield is generally low, but the company has shown it's committed to making the dividend a selling point to investors.

Microsoft has increased its annual dividend for 23 consecutive years and increased it by over 160% in just the past decade.

MSFT Dividend data by YCharts

With a yield below 1%, Microsoft's dividend isn't mind-blowing. Still, it can have a real impact on total returns in the long run. In the past decade, Microsoft's stock price increased around 810%, and its total returns are around 960% (as of April 16). That's a noticeable difference.

Couple a dividend with Microsoft stock's growth potential, and you have a true two-for-one benefit for investors.

Should you invest $1,000 in Microsoft right now?

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Stefon Walters has positions in Apple and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.