Msft Stock Lags 20% as Azure Grows 39%
msft stock remained more than 20% below its all-time high even after Microsoft posted 39% Azure growth in fiscal 2026's second quarter. The gap leaves the shares trailing many tech names that are already at or near record levels.
Microsoft's 17% revenue jump
17% revenue growth in fiscal 2026's second quarter ended Dec. 31 showed the business was still expanding at a brisk pace. Earnings per share rose 60%, although a gain on Microsoft's OpenAI investment heavily influenced that figure, while non-GAAP EPS increased 23%.
39% Azure growth was the clearest operating signal in the report. Microsoft has a similar growth rate to peers trading at richer valuations, yet its shares still change hands at a discount to those peers on a forward price-to-earnings basis.
30 times forward earnings
30 times forward earnings is the valuation level that would imply about 20% upside for Microsoft. That move would be enough to push the shares back to their all-time high, turning the current discount into a rerating rather than a setback.
20% upside is the market’s current hurdle, and the recent one-month rally has not closed it. Microsoft has moved up with the rest of the tech sector, but the stock still sits below the level that would put it back among the handful of large tech names trading at record territory.
Azure and the rerating gap
39% Azure growth matters because Azure is the main route for Microsoft to benefit from AI, and the company’s latest quarter suggests that engine is still running hard. If that pace holds, the stock’s discount to peers becomes harder to justify on growth alone.
Dec. 31 closed the quarter that produced the latest numbers, and the next test is whether Microsoft can keep that growth while narrowing the valuation gap. For now, msft stock is priced as a strong operator that the market still has not fully rewarded.
