How Much Upside Is Left In Microsoft Stock?

Microsoft (MSFT) shares returned 37% over the past three months, against 2.6% for the S&P 500. Even so, Microsoft’s P/E, the price divided by a year of profit, is 28.3. That is below 31.8, the stock’s average at the last twelve quarter-ends, leaving out readings above 100. A run that big makes buyers wary, but the shares cost less per dollar of profit than usual. So how much upside is left in Microsoft stock at today’s price?

Microsoft Stock Could Have About 48% Upside Left

On the assumptions below, Microsoft stock would be worth about $753 a share in three years. That is 48% above today’s price of $508.96. Spread over three years, the gain works out to about 14% a year. The scenario is arithmetic on the company’s own numbers, not a forecast.

In this scenario, revenue grows 15.1% a year, a little below the 17.8% of the twelve months to fiscal Q4 2026. The table below sets today’s figures beside the scenario’s figures three years out.

All of the gain comes from Microsoft selling more. The P/E is held flat by assumption, and the gain is trimmed a little by a slightly lower net margin. In fiscal 2026, Microsoft’s fastest-growing segment was Intelligent Cloud, which includes the Azure cloud computing service. Revenue from Azure and other cloud services grew 43% in fiscal Q4 2026.

Can Microsoft Keep Selling More Cloud And Copilot?

So far, yes. Management said on the fiscal Q4 2026 call that customer demand still exceeds available capacity. Microsoft also said it remains on track to roughly double its overall capacity in two years.

Copilot, Microsoft’s AI assistant, is the other product Microsoft is selling more of. By the fiscal Q4 2026 call, paid Microsoft 365 Copilot seats had passed 30 million. NHS England, for example, is rolling out Copilot to 505,000 clinicians and staff. Microsoft is also moving from charging per seat to charging per seat plus usage.

Customers have signed $678 billion of commercial contracts that Microsoft has not yet booked as revenue. The part of that total excluding OpenAI grew 25%. Management gave no full-year revenue figure for fiscal 2027, only a call for another year of double-digit growth. Management also expects a slightly lower operating margin in fiscal 2027 as it spends on capacity.

How Microsoft’s Upside Changes In Different Scenarios

The table below shows the three-year upside when one assumption changes and the other two stay as they are.

The upside is smallest if the net margin falls back to its three-year average. The margin has room to fall because today’s net margin matches its highest level in ten years.

With the P/E and margin as assumed, three years of owning the stock would return nothing if revenue grew 1.0% a year. That is 16.8 points below the pace of the last twelve months. Microsoft’s slowest annual revenue growth in the last three fiscal years was 14.9%.

Revenue growth is where Microsoft’s upside comes from. Yet growth can fall a long way from its recent pace before owning the stock returns nothing. The case stays intact as long as customer demand keeps exceeding the capacity Microsoft can supply. If revenue growth slows sharply, Microsoft becomes a riskier bet that relies more on its margin staying near its ten-year high.

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