Is Microsoft Stock Paying You Enough For The Swings?

October 2nd, 2026 · by Trefis Team

MSFTYTD+6.7%SPYYTD+12.6%QQQYTD+21.1%

You may hold Microsoft (MSFT) stock, or be about to, after its shares jumped more than a third from July through September. If you also hold funds that follow the market, you feel every Microsoft swing on top of theirs. Did five years of holding Microsoft beat simply owning the S&P 500 index?

No: Microsoft Finished Just Behind The S&P 500

Over the past five years, Microsoft stock returned 13.1% a year including dividends. The S&P 500 returned 13.6% on the same basis. So you earned slightly less than the index, and sat through wider swings to get it.

Volatility is a measure of how widely a stock’s daily moves vary over a year. Microsoft’s was 28.2% a year over the past five years, against 17.0% for the index.

Divide the yearly return by the yearly volatility. The result is what each unit of swing has earned. Over the past five years, it is 0.46 for Microsoft and 0.80 for the S&P 500. For each unit of swing, Microsoft holders earned a little over half of what index holders did.

Where Do Microsoft’s Wide Swings Come From?

Mostly from Microsoft itself. Averaged over the market’s up days and down days, the stock moves about as far as the index.

Over the past year, the S&P 500 rose 0.63% on its average up day. On those same days, Microsoft rose 0.63% too. On a $10,000 holding of Microsoft, that was a gain of about $63.

On its average down day, the index fell 0.61%. On those same days, Microsoft fell 0.69%. On the same holding, that was a loss of about $69. Microsoft moved 0.99% on average for each 1% the index moved over the past year. So when the market moves, owning Microsoft is much like owning more of the index.

Those figures are averages. Microsoft’s single days vary far more. Its volatility over the past year was 32.7%, against 13.0% for the S&P 500. Over the same year, a score of how closely the two move together was only 0.39, where a score of 1.0 would mean in perfect step.

Will Microsoft Keep Swinging This Widely?

Probably, because Microsoft is spending heavily on data centers before the return on them is known. Capital spending was $41 billion in fiscal Q4 2026. On the fiscal Q4 2026 call, management said it expects ups and downs in the cycle.

Demand is strong for now. Management said on the same call that customers want more capacity than Microsoft has. It guided to revenue growth of about 45% at Azure, its cloud computing unit, for fiscal Q1 2027, before currency effects. Look at Azure growth in that quarter’s report. Growth well below that guide would be the first sign that demand or new capacity is falling short.

If the past year is a guide, Microsoft rises about as far as your index funds on the average up day. On the average down day it falls slightly further, so it does not steady the rest of your money. Over the past year, Microsoft’s wider swings came mostly from the company itself. Over the past five years, Microsoft returned slightly less than the index and swung more widely. If you also own other companies building AI data centers, you already hold the same bet. Microsoft adds to it.

How To Act On MSFT?

Now you know MSFT better. And that’s our purpose: to make you informed before you invest your money. However, making a bet on a single stock carries its own risks.

There is a smarter choice. Since its inception, the Trefis High Quality (HQ) Portfolio has beaten the benchmark that combines the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000. And it did so without taking the concentrated risk that comes with do-it-yourself stock picking.

If you’d rather act on MSFT itself: