Microsoft Corporation

This article is part of our monthly series where we highlight five large-cap, relatively safe, dividend-paying companies offering significant discounts to their historical norms. We go over our filtering process to select just five conservative DGI stocks from more than 7,500 companies that are traded on U.S. exchanges, including OTC networks. In addition to the primary list that yields 3.7%, we present two other groups of five DGI stocks, each with moderate to high yields of up to 8%.

Microsoft delivered strong Q1 FY2027 results. The company's revenue grew by 18.8% YoY to $92.3 billion, beating estimates by 1.7%. Azure revenue accelerated to 48% growth, implying that the company's AI investment is paying off.

Artificial intelligence (AI) stocks are plunging following the results of the midterm elections.

I reaffirm my Strong Buy rating on Microsoft with a price target of $638, reflecting 19% upside driven by accelerating Azure and AI monetization. MSFT posted Q1 FY2027 revenue of $92.3B (+19% YoY), with Azure growth at 48% and Microsoft Cloud revenue up 30%, despite gross margin compression. AI adoption is translating into monetization, as Copilot and Foundry usage surge and consumption-based models expand revenue opportunities beyond subscriptions.