The Magnificent Seven stocks have earned their reputation for consistent growth and resilience. Among them, Microsoft (NASDAQ:MSFT) stands out as a particularly compelling buy — especially if the stock experiences a 10% pullback. While it may not be the fastest mover of the group, Microsoft’s stability, scale, and future growth potential make it a cornerstone holding for any long-term portfolio.
But for investors also seeking more aggressive upside — or a value play with income potential — there’s a Canadian tech stock worth considering: OpenText (TSX:OTEX).
Also Read: Best Canadian stocks 2025
Why Microsoft Is a Buy-on-the-Dip Stock
Microsoft has evolved into one of the world’s most reliable tech giants. While the explosive share price gains of decades past may not repeat, the company remains a long-term compounder with immense staying power.
Its latest earnings report proves this. In Q4 and its full-year results, Microsoft posted:
- Revenue up 18% to US$76.4 billion
- Operating income up 23% to US$34.3 billion
- Net income up 24% to US$27.2 billion
- Earnings per share (EPS) up 24% to US$3.65
Cloud growth continues to drive momentum, with Microsoft Cloud revenue rising 27% and Azure up 39%. Beyond this, Microsoft returned US$9.4 billion to shareholders via dividends and share buybacks, while boasting a balance sheet that now holds a staggering US$619 billion in assets.
The only catch? You’re paying for quality. Microsoft currently trades at a forward P/E of 33 and a P/S of 13.5, making it pricey by traditional metrics. However, given its consistent execution and growth, a 10% dip could be a rare buying opportunity for long-term investors to load up on a proven compounder.
Also Read: AI tech stocks Canada
Looking for Value and Yield? Consider OpenText
While Microsoft may not dip anytime soon, there’s another tech opportunity closer to home that offers compelling value — and income: OpenText (TSX:OTEX).
Currently in the midst of a strategic transformation, OpenText is focusing on agentic AI solutions for enterprise customers. This pivot may seem risky to some, but for long-term investors, it represents an opportunity to buy into a re-rating phase with plenty of upside.
Despite a 3.8% drop in revenue last quarter, the stock trades at just 8.9 times earnings, suggesting the market is anticipating an eventual earnings rebound. In the meantime, investors benefit from:
- A 3% dividend yield
- A 64% payout ratio
- Solid free cash flow to support the dividend
This makes OpenText a rare tech stock that not only offers potential upside but also pays investors to wait for its turnaround.
Bottom Line: Two Tech Stocks for Different Goals
If you’re looking for a high-quality, long-term hold, Microsoft remains one of the best options in the market — even at a premium. Any pullback presents a buying opportunity for patient investors who want core exposure to a leading name in tech.
On the other hand, OpenText offers a compelling value play for those willing to take on a bit more risk in exchange for stronger growth potential and a dividend yield.
Better yet? You don’t have to choose. Microsoft can serve as a foundational position, while OpenText offers attractive upside and income on the side. Together, they provide a balanced tech allocation — mixing global stability with homegrown opportunity.
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