Microsoft’s Impressive $678 Billion Sales Backlog Signals 84% Growth Amid Azure’s $100 Billion Revenue: Is the Stock’s Forward P/E of 25 Justifiable?

Key Facts on Microsoft Cloud Growth

Microsoft (NASDAQ: MSFT) reported a 27% year-over-year increase in cloud revenue during its fiscal 2026 fourth quarter, contributing to a total sales backlog of $678 billion, which is an 84% rise from the previous year. Microsoft Azure has surpassed $100 billion in annual recurring revenue, indicating strong demand for cloud solutions driven by artificial intelligence.

Over the past decade, Microsoft has maintained a compound annual revenue growth rate of 14.6%, which has accelerated to 16.1% over the last three years. The continued growth in the cloud segment, which accounts for two-thirds of total revenue, signals a robust trajectory for future earnings as demand for AI-related services escalates.

Despite a modest 3% increase in stock value so far in 2026, significantly underperforming the S&P 500, strong fundamentals coupled with a favorable forward P/E ratio of 25 suggest potential for recovery and growth. The artificial intelligence industry is projected to grow at a compound annual growth rate of 30.6% through 2033, further enhancing the cloud computing landscape.