Shifting Perspectives on Microsoft Stock: My Journey to a New Evaluation

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Key Points

  • Microsoft (NASDAQ: MSFT) reported fiscal year 2026 revenues of over $331 billion, an 18% increase from the previous year.

  • Operating income rose 21% to over $155 billion, with net income at $133.7 billion and earnings per share (EPS) growth exceeding 20%.

  • In Q4 2026, Microsoft’s revenue reached $90 billion, driven by a 32% growth in the Intelligent Cloud segment and Azure revenue surpassing $100 billion annually.

The company’s AI business has also gained traction, with a $37 billion annual run rate, growing 123% year over year. Microsoft 365 Copilot has over 30 million paid seats, highlighting successful integration of AI within its products. As of early August 2026, Microsoft trades at a P/E ratio of 28 to 28.5, slightly below its 10-year average of 30.

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