After a Strong Quarter, Is Microsoft Stock Headed for a New All-Time High?

This year has been a volatile one for Microsoft (NASDAQ: MSFT). The tech giant went on a sharp decline in the early part of 2026 as investors grew bearish on software stocks, and even a behemoth such as Microsoft wasn't spared. At one point, it was down well over 20%.

Recently, however, the company posted its fourth-quarter numbers, which sparked a revival. It's been surging over the past few days, and it's now back to around the levels where it started the year and is approaching $500. Could it be on its way to a new all-time high?

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Microsoft easily beat expectations in Q4

Last week, Microsoft reported fourth-quarter earnings that came in well ahead of analyst expectations. The company's revenue for the June quarter totaled $90 billion and rose 18% year over year, which was better than Wall Street projections of $87.6 billion. Its adjusted per-share profit of $4.74 was also well above the $4.24 expected by analysts.

Of key importance was also the growth rate in its cloud business, Azure. At 43%, that was a faster rate than the 40% growth it posted in the third quarter. Earlier this year, investors were growing concerned about Azure's slowing growth rate, but with that improving in Q4, investors have become bullish on the tech stock once again.

Is Microsoft's stock still destined to rise higher?

Microsoft's stock has been undervalued for much of the year, but it wasn't all that long ago that it looked a bit expensive; a year ago, it was trading at close to 40 times its trailing earnings. Now, with its value rising again, its price-to-earnings multiple is creeping up to around 27.

For long-term investors, the stock can still make for an excellent buy, but it's important to consider the valuation, as that could limit returns and even lead to losses, despite the business being a solid one. It's currently trading at a bit higher than the average S&P 500 stock (which trades at 25 times earnings), but the good news is that it's still not as expensive as it was last year.

Shares of Microsoft may continue to rise this year and even reach new all-time highs. Last year, they hit a peak of more than $553. This is a quality blue chip stock to hold for the long haul, given its dominance in the tech sector and how prevalent its products and services are throughout the corporate world.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool has a disclosure policy.