As Microsoft partners with Nvidia and Anthropic, should you buy, sell, or hold MSFT stock?

With Microsoft (MSFT) set to generate huge revenue from the top two AI startups, MSFT stock is a buy right now for investors looking for more exposure to AI and/or Big Tech.

Among the other important positive attributes of MSFT stock are its strong financial results, relatively low valuation, high software exposure, and low risk.

MSFT, one of the world’s leading software manufacturers, markets the Windows operating system, along with the Office software suite. The firm also offers cloud services through its Azure unit.

Although the tech giant has a massive market capitalization of $3.5 trillion, its forward P/E ratio is relatively low at 29.8 times, while its trailing P/E ratio is just under 33 times.

In Microsoft’s fiscal first quarter ending in September, its revenue rose 18% compared to the same period a year earlier to $77.7 billion, while its operating income rose 24% year over year to $38 billion.

Suggesting that the name may rise a lot in the long term, its Relative Strength Index was just 32 as of November 25.

Under the deal between Microsoft, Anthropic and Nvidia (NVDA) announced on November 18, Anthropic agreed to spend $30 billion on MSFT’s “computing capacity” in addition to getting up to 1 gigawatt of additional computing power from the tech giant. Additionally, Nvidia will invest up to $10 billion in Anthropic, and MSFT will provide the startup with up to $5 billion. Also worth noting is that “Anthropic will scale its Claude AI model on Microsoft Azure, powered by NVIDIA technology.”

Although Microsoft has made some smaller deals with Anthropic in the past, this appears to be the first time the two companies have signed major contracts worth billions of dollars. And as a result of these deals, the tech giant’s cloud unit is likely, for the foreseeable future, to draw large amounts of revenue from the two biggest and hottest startups in the AI ​​space: Anthropic and OpenAI. Those revenue streams should help MSFT’s Azure continue to grow very quickly over the long term. (MSFT’s sales of Azure “and other cloud services” increased 40% year over year in MSFT’s first quarter.)

In the first three quarters of 2024, MSFT earned about $866 million in “revenue sharing payments” from OpenAI. On October 29, 2025, Microsoft revealed that the startup, in which MSFT has invested more than $13 billion, agreed to purchase “an incremental amount ($250 billion) of Azure services.”

Given the tremendous achievements and enormous growth opportunities of Anthropic and OpenAI, MSFT’s deals with both companies should allow Azure to continue growing very rapidly for the foreseeable future, which bodes very well for the overall outlook for MSFT stock.

Despite MSFT’s powerful growth and its opportunity to benefit greatly from the ongoing AI revolution, the stock’s P/E ratio of 33 times is only a little more than 10% above the S&P 500 Index ($SPX) average P/E ratio of 29.7 times. Additionally, unlike Nvidia, which makes most of its revenue from hardware, Microsoft makes most of its revenue from software. Compared to hardware, software tends to be more cost-effective and less likely to become commoditized. In fact, Azure’s market share has remained stable in the 20% to 25% range for the past few years.

In light of MSFT’s low stock valuation, Azure’s continued market share, Windows and Office’s continued high market share globally, and the company’s deals with OpenAI and Anthropic, I believe MSFT represents little risk to investors.

And overall, MSFT stock appears to be the best growth stock at a reasonable price (GARP).

As of the date of publication, Larry Ramer had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com