As the 10-Year Treasury yield has risen sharply over the past few trading days, the stock market has dropped. In particular, growth stocks, whose high multiples are particularly susceptible to rising rates, have dropped in a big way. One big growth tech giant that hasn’t dropped in a big way, though, is Microsoft (NASDAQ:MSFT). Microsoft stock is a buy here.

In the whole FAANNG plus Microsoft group, Microsoft has been one of the best performers during this rising rates storm.

While stocks like Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), and Nvidia (NASDAQ:NVDA) are all either in or close to correction territory, Microsoft is just 4% off recent highs. That is actually better than the entire Nasdaq, which is 4.5% off recent highs.

Why has Microsoft stock held up so well as rates have shot higher? Valuation. Quite simply, a lot of big growth tech stocks trade at really big multiples. Not Microsoft. Microsoft stock trades at just 25X forward earnings. That is still big. But, it isn’t Amazon, Netflix, or Nvidia big.

Yet, despite this relatively low valuation, Microsoft has a really bright future through robust cloud expansion. As such, this stock features a relatively conservative valuation on top of promising long-term growth fundamentals, and that is a winning combination when rates are rising.

Investment takeaway? Buy big dips in Microsoft. Right now, the stock is holding up pretty well. But, if broader market weakness persists and drags MSFT down to its 100-day moving average around $105, that would be a dip worth buying.

This is especially true if the dip happens before the Q1 earnings report at the end of the month, because that report promises to be quite strong and get Microsoft stock back on a winning path.

Cloud Promises a Bright Future

The big story at Microsoft is that this company is making huge moves in the cloud market. Specifically, Azure has been on fire, and is gradually stealing share from cloud market leader Amazon Web Services (AWS).

Considering Azure is growing at an 80%-plus rate and AWS is growing at a sub-50% rate, it looks like Microsoft will continue to steal cloud market share from Amazon for the foreseeable future.

This thesis is also supported by the fact that Amazon is selling cloud services to companies it directly competes with on the retail front. This hasn’t mattered all that much to-date because Big Retail doesn’t comprise a big portion of cloud clients.

But it will matter eventually as the Amazon threat becomes more multi-faceted and has an effect more businesses than ever. In five years, Big Retail won’t be only the group competing with Amazon.

Grocers, convenience stores, pharma store operators, delivery companies, advertising platforms, and more will be in competition with Amazon . Thus, as Amazon expands its business scope, it also risks losing cloud clients to Microsoft. Inevitably, then, Amazon’s expansion will provide a tailwind for Microsoft cloud.

Moreover, Microsoft has a suite of other cloud offerings (namely, Office 365 and Dynamics 365). Both of those businesses are growing at 30%-plus rates and are the standard in their industries.

Overall, Microsoft is turning into a hyper-growth cloud company. As this transition plays out, Microsoft’s growth and profitability profiles will improve, and earnings will soar.

So long as this dynamic persists, Microsoft stock will head higher.

Buy Before the Q1 Report

Near-term trends imply that Microsoft’s cloud business has maintained robust momentum over the past several months. Therefore, Microsoft should report robust first quarter numbers at the end of October. Those numbers should reverse investor sentiment, and get MSFT stock back to its winning ways.

Over the past several months, Microsoft’s cloud business has secured and/or expanded a number of partnerships, the sum of which implies that Azure continues to gain share on AWS.

For example, Microsoft has secured and/or expanded cloud partnerships with Volkswagen (OTCMKTS:VWAGY), Adobe (NASDAQ:ADBE), SAP (NYSE:SAP), Mastercard (NYSE:MA), and many more, all in the past few months.

In other words, Microsoft’s 80%-plus growth cloud business doesn’t appear to be slowing all that much, if at all. First quarter numbers likely will reflect this. Cloud strength in the Q1 report will restore investor confidence and enthusiasm. That restored confidence and enthusiasm will push Microsoft higher, and get the stock back to its winning ways.

Bottom Line on Microsoft Stock

Microsoft stock has weathered the recent rising rates storm better than its big tech peers because of the stock’s relatively conservative valuation.

This relatively conservative valuation on top of a promising growth narrative is a winning combination for MSFT stock to head higher both in the near and long term.

As such, near term weakness remains a long term opportunity, and this is still a stock you want to buy on dips to critical support levels.

As of this writing, Luke Lango was long MSFT, AMZN, NVDA, and ADBE.