Earnings season is right around the corner, and all eyes will be on big tech.
As of market close on April 22, each “Magnificent Seven” stock has a negative price return in 2025. Among this cohort of megacap technology stocks, Microsoft (MSFT 1.21%) and Meta Platforms (META 2.65%) have dropped by the least amounts — falling by 13% and 14.5%, respectively.
Both companies are set to report earnings for the first calendar quarter of 2025 on April 30. Let’s explore why Microsoft and Meta could be good buys right now, despite ongoing turbulence in the stock market.
Image source: Getty Images.
What road bumps could Microsoft and Meta face in the short term?
I can’t think of a bigger potential headwind for technology businesses right now outside of the new tariff policies. Both Microsoft and Meta are investing billions into AI infrastructure — from Nvidia chips to custom silicon engineering, data center buildouts, and more.
The details surrounding which items and raw materials are subject to tariffs are complex. I think it’s reasonable that both Microsoft and Meta could be looking at higher costs related to their AI infrastructure plans. In addition, it’s not entirely clear how corporations are planning for how tariffs could impact their business operations.
As a result, companies could be preparing to scale back spending in areas such as cloud computing, cybersecurity, or advertising — all of which would lead to decelerating sales for Microsoft and Meta. A slowing sales base coupled with rising prices would take a toll on profitability for each business.
One way to mitigate shrinking profits is for Microsoft and Meta to scale back their own AI capital expenditure plans. However, investors may not be encouraged by that choice since AI is the foundation of each company’s growth narrative right now. Slowing that down for the sake of near-term profitability may not sit well with investors.
Why I still like Microsoft for the long run
I see the ongoing sell-off across the tech sector as an opportunity to buy the dip in high-quality names. Right now, Microsoft’s forward price-to-earnings (P/E) ratio of 28 is slightly below the company’s three-year average.
MSFT PE Ratio (Forward) data by YCharts
Even though IT budgets could be operating under tighter controls for the time being, I tend to think that businesses are going to identify cost savings in areas outside of mission-critical infrastructure such as cloud computing and cybersecurity software.
Although I’m not expecting a monster quarter from Microsoft next week, I remain cautiously optimistic that cloud growth from Windows Azure will show some signs of resilience. When you complement this with Microsoft’s diversified ecosystem that includes personal computing, social media (LinkedIn), gaming, and more, I see Microsoft as a business that is relatively insulated from a possible economic slowdown caused by the tariff environment.
Why I still like Meta for the long run
On the surface, you might think that Meta is facing outsized pressure compared to its peers given the company really only has two sources of growth: advertising and the metaverse. Candidly, the company’s metaverse ambitions are far from reaching widespread scale or profitability, and the digital advertising landscape is packed with competition from the likes of Alphabet, TikTok, and Snap, just to name a few. With that said, I think these are surface-level arguments.
Meta’s relative price resilience compared to its Magnificent Seven peers could suggest that investors are less worried about the company’s growth prospects. I think this makes sense, too. I don’t see tariffs having much of an impact on Meta’s business overall. Similar to Microsoft, the company could witness a brief slowdown in revenue growth, but I don’t think it will be detrimental.
With leading platforms including Facebook, WhatsApp, and Instagram in its ecosystem, Meta is in a lucrative position to continue monetizing its billions of users — especially as AI tailwinds unlock new opportunities in the consumer market.
META PE Ratio (Forward) data by YCharts
As of this writing, Meta is trading right in line with its three-year average forward P/E. Considering the company has made huge strides in the world of AI to help diversify the business over the last three years, it would appear that investors aren’t applying much value to this potential growth right now.
Remember to think long term
The big thing investors should keep in mind is that these tariff policies could change at any time. Moreover, even if trade negotiations with other countries linger to the point of an economic slowdown, such a cycle won’t last forever.
In the meantime, investors are continuing to sell off growth stocks given all of the uncertainty in the market right now. In my eyes, Microsoft and Meta are trading for reasonable valuations and I think investors should take advantage, buy the dip while it lasts, and prepare to hold on for the long term.
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. Adam Spatacco has positions in Alphabet, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, Microsoft, and Nvidia. 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.
