Microsoft stock nears record as Azure growth fuels 48% rally

Microsoft shares trade above $505 after Q4 revenue of $90 billion and 43 percent Azure growth drove a 48 percent rally from June lows.

"Demand continues to exceed available supply," Amy Hood, chief financial officer at Microsoft, said on the earnings call.

Non-GAAP EPS came in at $4.74, beating consensus by $0.50. Azure revenue grew 43 percent year over year, with the company guiding Q1 FY2027 Azure growth to roughly 45 percent in constant currency. Commercial remaining performance obligations reached $678 billion, up 84 percent.

The stock closed at $505.06 on August 28, up 1.75 percent, with a consensus price target of $560.27 across 47 analysts. A 52-week high of $553.72 sits about 9 percent above current levels, and the company's $3.74 trillion market cap puts a $5 trillion valuation within reach if Azure growth holds.

The earnings report on July 29 reset the narrative around Microsoft's valuation. Revenue of $90.01 billion, up 17.75 percent year over year, and an EPS beat of 11.81 percent triggered an after-hours move of roughly 8 percent as investors recalibrated for sustained AI-driven cloud demand. Microsoft 365 Copilot now has 30 million paid seats with net additions more than doubling sequentially, while GitHub Copilot counts 50 million users and revenue accelerated over 60 percent quarter over quarter after a shift to usage-based billing.

Metric	Actual	Consensus	Beat/Miss
Revenue	$90.0B	—	+17.75% YoY
EPS (non-GAAP)	$4.74	$4.24	+$0.50
Azure growth	43%	—	—

Analyst coverage remains broadly positive. Forty-two of 47 tracked analysts rate Microsoft a Buy, five rate it Hold, and none assign a Sell. Price targets range from $400 at the low end to $870 at the high end, with a median near $550. The 24/7 Wall St. target of $599.92 implies 18.9 percent upside, while GuruFocus's GF Value of $579.48 suggests the stock is modestly undervalued by 14.3 percent.

The bear case centers on capital intensity. Fiscal 2026 capital expenditures reached $115.95 billion, and free cash flow fell 6.46 percent. More Personal Computing revenue declined 4 percent. Hood framed CapEx as flexible, noting that "if the demand environment changes, you just slow down" the short-lived GPU and CPU spend that drives most of the outlay.

Institutional filings show mixed positioning. One asset manager acquired 2,130 additional shares while another sold 4,855, and insider activity over the past 12 months shows net selling of $125.7 million versus $2.0 million in purchases. GuruFocus tracks 59 gurus holding Microsoft, with 25 increasing and 31 trimming positions.

The stock's 48 percent rally from its June low has brought it within 9 percent of its 52-week high of $553.72. The next event to watch is the Q1 FY2027 earnings report, where investors will see whether Azure's 43 percent growth rate can hold at the guided 45 percent constant-currency pace. If it does, the gap between the current price and the $560 consensus target narrows, and the upper-bound targets in the $800-plus range become the reference point.

This article is for informational purposes only and does not constitute investment advice.