Microsoft Just Had Its Best Quarter Since 1991
Microsoft just posted its strongest quarterly stock gain in 35 years, but the rally left it barely above where it started the year and still below its all-time high. Whether November's earnings confirm a breakout or expose a false start…
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Microsoft (NASDAQ:MSFT | MSFT Price Prediction) closed its September quarter at $512.90 on September 30, 2026, adding 0.77% in the final session.
The stock gained about 39% in the third quarter of 2026, its best quarter since the first quarter of 1991, after a 28% decline in the first half.
The climb mostly recovered earlier losses, because Microsoft is up only 6.73% year to date, and its one-year change through September 30 is -0.16%.
The fifty-two-week high is at $553.72, above the close, which leaves the business to show it can carry the stock past its old peak.
Azure and Copilot Powered the Rally
Azure and other cloud services revenue up 43% in the fiscal fourth quarter, while management put full-year Azure growth at 41% on its earnings call.
Intelligent Cloud revenue reached $39.31 billion, up 32%.
Microsoft 365 Copilot passed 30 million paid seats, and the company is moving to a “per seat plus consumption” model, meaning a license fee plus charges for greater usage.
Part of the beat was one-time, because non-GAAP EPS of $4.74 exceeded the $4.24 consensus, but it included a $3.2 billion gain on the Anthropic stake.
Fiscal Fourth-Quarter Results Back the Move
Fiscal fourth-quarter revenue came in at $90 billion on July 29, 2026, up 18%, with Azure passing $100 billion in annual revenue.
Shares went from $395.496 at the filing to $464.72 one day later.
Commercial remaining performance obligation, meaning contracted revenue not yet recognized, grew 84% to $678 billion, but only 25% excluding OpenAI, so one customer drives much of the backlog.
Analysts Kept Raising Targets Into Quarter End
Piper Sandler’s Billy Fitzsimmons raised his target to $610 from $550. He estimates that each 10% of customers moving from the E5 to the pricier E7 Microsoft 365 plan adds about $2 billion a year, and that Copilot usage-based pricing reaches a $2 billion run rate by fiscal 2028.
That math has early support, because management said hundreds of enterprise customers bought millions of E7 seats two months after launch.
Oppenheimer lifted its target to $570 from $515 after the late-September Copilot update. TipRanks shows a Strong Buy consensus and an average target of $558.86.
Why Wall Street Sees Limited Room From Here
That average sits only slightly above the $512.90 close, and the flat one-year return shows the rally recovered earlier losses without reaching a new high.
Spending weighs against that view, because quarterly capital expenditures rose 109.63% to $35.80 billion, free cash flow fell 23.19%, and management expects fiscal 2027 capital spending to grow again. Somebody must power, cool, and network all that outlay. This is the whole premise of our free report on seven AI infrastructure suppliers that aren’t chipmakers.
The next earnings report is expected November 4, 2026, although Microsoft has not confirmed that date.
What the November Report Will Decide for Microsoft
The rally has fundamental support, as reported revenue and an expanding contracted backlog support it, and management guided first-quarter fiscal 2027 Azure growth of about 45% in constant currency.
At 28 times earnings, the stock is priced for steady growth, so returns will likely track closer to the consensus target than to a repeat of the third quarter.
The November report will test this. If Azure lands near that 45% guide and the stock closes above $553.72, the recovery has become a breakout, while an Azure shortfall would weaken the case.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
