The stock market has a short memory, and Microsoft’s recent rally is proof of just how quickly the narrative can flip. Six weeks ago, investors were questioning whether the company’s massive artificial-intelligence spending would ever generate returns. Today, the same investors are scrambling to get in before the stock climbs further.
The numbers tell the story. After bottoming out at €307.10 on June 25 — a 52-week low that reflected deep skepticism about the company’s capital-expenditure strategy — Microsoft shares have surged to €425.80, a gain of roughly 39 percent. The past seven trading sessions alone delivered a 24.45 percent advance, with Friday’s session adding 5.66 percent to close at €425.75.
The inflection point
What changed? The answer lies in a shift from promises to proof. Microsoft’s fourth-quarter results, published on July 29, showed that the company’s AI investments are no longer a cost center — they’re becoming a revenue engine.
Azure, the company’s cloud division, has crossed the $100 billion annual-revenue threshold for fiscal 2026, with growth accelerating to 43 percent year over year. That acceleration matters more than the milestone itself: it signals that enterprise customers are moving beyond pilot projects and committing real budgets to AI workloads.
Microsoft 365 Copilot has surpassed 30 million paying users, a figure that transforms the product from an experiment into a genuine business model. The company has also shifted toward usage-based billing, supported by new generative models introduced since July 2026 — a monetization approach that outpaces many competitors.
Perhaps most telling is the traction of “Agent 365,” Microsoft’s platform for autonomous AI agents. With 40 million active agents deployed across tens of thousands of companies, the technology is no longer just assisting workers — it’s performing tasks independently.
A backlog that backs the thesis
What separates this rally from speculative froth is the visibility embedded in Microsoft’s order books. Remaining performance obligations — the contracted revenue not yet recognized — stand at $678 billion, a figure that provides unusual certainty in the technology sector. That backlog, combined with disciplined capital expenditure while growth accelerates, supports the case for a sustained revaluation.
Should investors sell immediately? Or is it worth buying Microsoft?
The company has also booked a $3.2 billion gain from its stake in Anthropic, adding a tangible financial benefit to its AI partnerships.
The chart says: pause
For all the fundamental strength, the speed of this recovery carries its own warning. The 14-day relative strength index sits at 78.2, firmly in overbought territory. Annualized volatility over the past 30 days exceeds 53 percent. These are the conditions that typically precede a consolidation phase, where the market digests recent gains before the next leg.
The stock now trades 14.50 percent above its 200-day moving average of €371.83, and the 38.64 percent rebound from the June low signals that a durable bottom has formed. Yet even after this week’s surge, Microsoft shares remain nearly 11 percent below their 52-week high of €478.10 from October 2025. On a trailing twelve-month basis, the stock is still down 8 percent — a reminder of how deep the skepticism had become.
What the market is pricing now
Microsoft’s market capitalization stands at roughly €2.991 trillion. The average analyst price target of €487.52 implies another 14 percent of upside, assuming the growth narrative holds.
The year-to-date performance of about 3 percent looks modest against the backdrop of the recent rally, but that masks the momentum of the past few weeks. The bull case for Microsoft no longer rests on AI promises — it rests on visible, scalable monetization. The company spent a year building the factory; now it’s demonstrating it can sell the product.
The question for the remainder of 2026 is no longer how much Microsoft invests, but how efficiently it converts that infrastructure into high-margin software revenue. The market’s answer, at least for now, is that it can — and the stock price reflects that conviction. Short-term caution is warranted given the overbought conditions, but the fundamental picture has shifted in a way that makes the June pessimism look premature.
Ad
Microsoft Stock: Buy or Sell?! New Microsoft Analysis from August 3 delivers the answer:
The latest Microsoft figures speak for themselves: Urgent action needed for Microsoft investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from August 3.
Microsoft: Buy or sell? Read more here...
