Microsoft Stock Has Gained More Than 50% in About 4 Months. Here's What It Has Usually Done Next.
Key Points
Microsoft stock has risen around 57% since its June 25 close.
Shares were up a year later after 11 of 13 past runs this fast.
The latest run, in July 2025, was followed by a 13% fall.
Microsoft (NASDAQ:MSFT) shares jumped nearly 7% on Wednesday, Nov. 4, as U.S. stocks rallied the day after Democrats won control of Congress in the midterm elections.
The stock sits near $553 as of this writing. That leaves it about 57% over its June 25 close of $352.83, and the rise took just 92 trading days.
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A move like that is rare for a company worth about $4 trillion. But Microsoft has done it before. Going back through its daily closing prices to 1986, I find 13 past runs like this one. In 11 of them, the stock was up a year later, with a median one-year gain of around 33%.
It's a solid record. But it might mean less than it seems. Microsoft stock has climbed in around 74% of all one-year periods since 1986, fast run or not. And the latest run, in July 2025, is one of the two that finished down.
Image source: Getty Images.
Most of the big years came early
Every run starts the first day Microsoft closed at least 50% over its lowest close in the past 92 trading days. I used split-adjusted prices without dividends, and runs had to begin at least one year apart. "A year later" is the close 12 months after a run started (or the last trading day before it). By this rule, the current run began on Oct. 6.
Ten of the 13 past runs came between 1986 and 2001, when Microsoft was a much smaller company. The biggest years came in that stretch, too. Shares more than doubled over the year after the runs that began in November 1986, January 1991, and March 1998.
The one early miss followed a January 1988 run, when the stock was recovering from the October 1987 crash, and shares were around 12% down a year later.
Since the 2001 run, Microsoft has only moved this fast three times. The stock gained around 12% over the year after June 2009 and about 33% after June 2020. Then it lost about 13% after July 2025.
Even some of the good years were rough. After the January 1992 and January 2001 runs, shares slid over 20% at one point before ending the year higher.
The July 2025 run started at a steep price
Microsoft's latest fast run hit the 50% mark the day after its fiscal 2025 fourth-quarter report on July 30, 2025. The July 31 close of $533.50 was around 50% over the April 8 low. Investors paid about 38 times earnings then, using the $14.13 a share Microsoft earned in fiscal 2025 on a non-GAAP (adjusted) basis.
Shares drifted mostly sideways over a few months. Then they fell all the way to that $352.83 close on June 25, 2026 -- around 34% below where the run began.
Even a 15% gain the day after Microsoft's fiscal 2026 report in late July didn't erase the loss, and on July 31, 2026, shares were still about 13% down from a year earlier.
I'd say the starting price mattered more than the pace of the run. At around 38 times earnings, the shares could fall a long way on any hint of trouble.
Is this run different?
In a couple of ways, I think it is. Adjusted earnings per share grew 22% in fiscal 2026, and the first quarter of fiscal 2027 (which ended Sept. 30, 2026) added another 18% gain, to $4.89. For the past four reported quarters, adjusted earnings were about $18.04 a share. At roughly $553, the stock costs about 31 times adjusted earnings, well under the 38 times earnings investors paid in July 2025.
Azure, Microsoft's cloud computing platform, is also accelerating. Its revenue climbed 40% year over year in the quarter that ended September 2025, then 42% in the quarter that ended this June and 48% in the last one.
Of course, that growth takes a lot of money. Microsoft's cash from operations rose 29% from a year ago. But free cash flow dropped about 27% to $18.6 billion as the company poured more cash into data centers.
What has Microsoft stock usually done after a run like this? It has usually kept rising. But that record only modestly beats the stock's odds in any given year, and the most recent case went the other way.
The business looks stronger than it did in July 2025, and the stock is cheaper relative to its earnings. Still, with free cash flow shrinking, paying about 31 times adjusted earnings just after a 57% run isn't something I'm eager to do.
Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool has a disclosure policy.