Microsoft Adds $1 Trillion as Shares Jump 37.5% on AI Optimism

Bloomberg·1 Oct 2026·

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Microsoft Corp. added $1 trillion to its market capitalization as its shares jumped 37.5% from July through September, the stock's best quarterly showing since 1998. The surge followed the company's late-July earnings, which showed the fastest cloud growth in four years on strong AI demand and sent the stock up 16% the next day, its best session since October 2008, adding $450 billion in market value. Microsoft was the fifth-best performer in the Nasdaq 100 Index, which gained just 0.4% over the same three months, and it is the only one of the big AI spenders, alongside Alphabet Inc., Amazon.com Inc. and Meta Platforms Inc., that hasn't seen free cash flow turn negative on an annual basis. Of 72 analysts tracked by Bloomberg who follow the company, only three don't have buy ratings and none rates it a sell, with the average price target implying roughly 11% upside over the next 12 months; Stifel upgraded the stock to buy last week, and Morgan Stanley's Adam Wood sees a total return of roughly 20% over the next year. Revenue is expected to rise 18% in Microsoft's 2027 fiscal year, roughly in line with fiscal 2026, and Wall Street expects that figure to hit 21% in fiscal 2029, while earnings per share is projected to climb nearly 19% in fiscal 2028 and 21% in fiscal 2029. The shares trade at almost 25 times estimated earnings over the next 12 months, a discount to their 10-year average of 27, though the stock's 6.1% gain this year still trails the Nasdaq 100's 20% surge.

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Microsoft added $1 trillion in market cap after blowout late-July earnings showing fastest cloud growth in four years, with analysts' buy ratings and price targets implying further upside.