AI Sell-Off: Why I'm Pounding the Table on This Incredible Stock

Artificial intelligence (AI) stocks have had a rough go in 2026. The sector was likely due for a break after dominating the markets since 2023, but that doesn't mean there still aren't compelling investment opportunities.

The reality is that the market may be tired of AI, but the growth will likely continue at its current pace (and maybe even greater) for some time, probably through 2030. This momentum means that once investors get used to all of this AI spending, some of the biggest names in the space could be ready to rocket higher.

One of the biggest bargains in the market right now is Microsoft (NASDAQ: MSFT). Microsoft is a huge player in AI, but its software is also a critical part in the day-to-day operations of countless businesses around the globe. Microsoft is a stalwart that isn't going anywhere, but its stock has been slammed in recent weeks. I think investors should start pounding the table on this stock, as it has seldom been this cheap over the past decade.

Image source: Getty Images.

Microsoft looks like a huge bargain

The words "Microsoft" and "bargain" rarely end up in the same sentence, but I think investors are free to start using that terminology. While Microsoft has traded at a premium to the market over a long time frame, it has earned that through consistent execution and market-beating growth.

Nothing has changed on the execution side, and Microsoft is still the industry standard when it comes to how a business should operate. Microsoft posted 17% revenue growth in its most recent quarter, demonstrating that the business is still delivering strong results. On the more AI-focused side of Microsoft's business, it delivered strong growth as well. Its cloud document segment, Azure, captures the majority of this revenue, as it's a place where AI developers can build and train AI models for use. This segment saw 39% revenue growth, showcasing why Microsoft needs to spend billions of dollars to continue expanding its AI footprint.

None of the investment theses has changed over the past few months, yet its stock price has. After the latest bit of sell-offs, Microsoft is nearing a decade-low valuation.

MSFT Operating PE Ratio data by YCharts

I'm using the operating price-to-earnings ratio because it removes one-time accounting effects and investment gains (which Microsoft has a ton of, thanks to its OpenAI investment). Anytime you can snag shares at this low of a price tag has been a genius buying opportunity, and I think right now is no different.

From a more traditional valuation standpoint, Microsoft trades for 22.9 times trailing earnings. Considering the broader market, as measured by the S&P 500 (SNPINDEX: ^GSPC), trades for 23.8 times trailing earnings, I think it's safe to say that Microsoft is an absolute bargain at these levels.

As a result, I think investors should scoop up Microsoft's shares before they rebound, as this is a rare opportunity.

Keithen Drury has positions in Microsoft. The Motley Fool has positions in and recommends Microsoft. The Motley Fool has a disclosure policy.