Microsoft trades at a forward P/E below its two-year norms after a July 29 fiscal Q4 report reversed an early-2026 slide, but the stock is now roughly flat for the year while the S&P 500 has climbed more than 12%. The stock also carries a pricier valuation than Nvidia, Alphabet, and Amazon despite growing more slowly than each of them.
Microsoft claws back a rough start to 2026
Microsoft dropped early in 2026 after reporting results for its fiscal second quarter, which ended December 31. The stock swung through the following months before strong fiscal fourth-quarter results on July 29 sparked a convincing rally. Even so, shares are now roughly flat for the year, while the S&P 500 has risen more than 12% over the same stretch.
Shares last traded at $482.12, up 0.2%, giving the company a market cap of $3.6 trillion. The stock has traded between $349.20 and $553.72 over the past 52 weeks.
Copilot and Azure drive the AI push
Microsoft is capturing AI demand through Copilot, which now has 30 million paid seats, a figure the source expects to keep rising as the tool gains adoption. Its cloud division, Azure, is growing even faster: revenue there expanded at a 43% pace last quarter, making it Microsoft's fastest-growing business.
Valuation premium outpaces Nvidia, Alphabet, and Amazon
Microsoft's forward price-to-earnings ratio has ticked up since the fiscal Q4 report but remains below where it has traded for most of the past two years. However, Motley Fool contributor Keithen Drury argues Microsoft trades at a more expensive premium than Nvidia, Alphabet, and Amazon while growing more slowly than any of the three. From a growth standpoint, he notes, the market is chasing Nvidia, and Microsoft still lags behind Amazon and Alphabet.
Drury doesn't call Microsoft a bad investment and views it as reasonably valued. Still, he says investors would be better served putting new money into Nvidia, Alphabet, or Amazon, arguing those three carry more upside potential than Microsoft at current prices.
Source: The Motley Fool
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