Microsoft (MSFT) posted double-digit gains in April trading, rising 10.2% for the month, while the S&P 500 gained 10.4% and the Nasdaq Composite rose 15.3% over the same period. After several sharp pullbacks earlier in the year, Microsoft’s valuation rebounded alongside the strong upward momentum of the broader market. Investors actively bought tech stocks in April, driven primarily by expectations of easing international tensions and some better-than-expected macroeconomic data.
On April 29, Microsoft reported results for the third quarter of fiscal year 2026, ended March 31. Non-GAAP earnings per share for the quarter were $4.27, with revenue of $82.89 billion, exceeding analyst average estimates of $4.06 per share and $81.39 billion in revenue. Quarterly sales grew 18% year-over-year, while earnings per share rose approximately 23% year-over-year. Despite the earnings beat, some components of the company’s guidance came in below market expectations, causing the stock to dip immediately after the release. Microsoft forecast revenue for the current quarter between $86.7 billion and $87.8 billion, with the midpoint below the analyst average of $87.53 billion; the adjusted operating margin guidance was 44%, below the expected 44.6%. Nonetheless, Microsoft’s stock has continued to rise in May trading, up about 2.1% month-to-date as of press time, compared to a roughly 2.3% gain in the S&P 500 and a 4.2% rise in the Nasdaq Composite.
Despite double-digit gains last month, Microsoft’s stock remains down 14% year-to-date in 2026. Prominent hedge fund TCI disclosed in May that it had sharply reduced its Microsoft stake from 10% of its portfolio at the end of last year to just 1% by the end of the first quarter, representing approximately $8 billion. In an investor letter, TCI founder Sir Christopher Hohn explicitly stated that the reduction was due to uncertainty about Microsoft’s future competitive position posed by rapid advances in artificial intelligence, specifically citing the impact on the Office productivity software business, while also expressing some concerns about the outlook for the Azure cloud platform. During the same period, TCI increased its stake in Alphabet from 3% to 5%, making it the fund’s largest technology holding.
Although some investors are concerned that Microsoft’s business could be disrupted by AI technologies from competitors, the company remains one of the most powerful players in the AI space. Trading may experience short-term fluctuations, but Microsoft still appears to be a stock worth holding for the long term.
