Microsoft (MSFT) has a high stock price, around $500 per share, which is not the lowest in the world. Although the importance of stock splits has diminished with the popularity of fractional shares, it remains practically significant for investors who cannot access fractional share trading or employ options strategies. Additionally, as a component of the Dow Jones Industrial Average, Microsoft’s stock price plays a key role in this price-weighted index. Within the Dow, only Goldman Sachs (GS) and Caterpillar (CAT) have higher stock prices than Microsoft, making it the third highest-priced component. This unique index composition could be a factor prompting Microsoft’s management to proactively announce a stock split to avoid potential future constraints.
Microsoft has a long history of conducting stock splits, having executed nine since its initial public offering, though the most recent one occurred in 2003. This history indicates that stock splits are not unfamiliar to Microsoft. However, times have changed, and the company’s management has undergone multiple transitions. Relying solely on past trends to predict future split decisions offers limited reference value. Therefore, the official answer can only be: Microsoft may announce a stock split when it releases its Q1 FY2026 earnings on October 29, but no one can guarantee it. Even without a split announcement, the earnings report itself may contain positive news that could drive the stock price higher.
Microsoft’s recent Q4 performance was exceptionally strong, winning favor with investors. Revenue increased by 18% year-over-year to $76.4 billion, while diluted earnings per share surged by 24%. For a corporate giant like Microsoft, maintaining such rapid growth is remarkable. Among all its businesses, the Intelligent Cloud segment stood out, with revenue growing 26% to $29.9 billion. Azure, the core of this segment, continues to experience robust demand, driven by the AI wave, achieving 39% revenue growth. Since most enterprises lack the capacity to build their own AI infrastructure and instead rent Microsoft’s computing power, Azure has become a key engine driving the company’s strong stock performance over the past decade.
To sustain its upward stock momentum, Microsoft must continue to demonstrate growth capability. Since 2025, its stock price has risen over 20%, yet this performance still lags behind some of its large tech peers. One advantage for Microsoft is that its current price-to-earnings ratio of about 33x, while not cheap, has not become as excessively expensive as some peers. However, the company still needs to deliver sustained growth to support this valuation. Therefore, a strong Q1 earnings report may already be priced in by the market, leading to a muted reaction. Although a stock split announcement could serve as a catalyst for a sharp rise in the stock price, this remains uncertain. Overall, investors may need to exercise patience and wait for a more opportune moment.
