Prediction: Microsoft Stock Could Go Parabolic After July 29. Here’s Why (Explained Simply)

Mark Your Calendar: July 29 Is a Big Day for Microsoft

On July 29, a giant tech company called Microsoft (its stock ticker is MSFT on the NASDAQ — a marketplace where you can buy pieces of companies) will share its fiscal fourth‑quarter earnings. Think of earnings like a report card that shows how much money the company made in the last part of its school year (its financial year).

• This date should be circled on your investment calendar.
• Microsoft’s stock has had a rough 2026: while most of the other “Magnificent Seven” stocks (a nickname for seven huge tech companies) bounced back from earlier price drops, Microsoft’s stock has been stuck going backward — it is down 20% since the start of the year.
• But July 29 could be the day Microsoft starts a strong upward run.

Important (ELI5): A “stock” is a tiny ownership slice of a company. When we say the stock is “down 20%,” it means a slice costs 20% less than it did in January.

A Quick Promo Note From the Original Article

The original story also included a promotional note:

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• It said that in 2009 a “Double Down” signal flashed for a then‑little chip maker called Nvidia. For the first time in years, a similar “Total Conviction” signal is now flashing for a company 1/100th the size of Nvidia.
• This was an advertisement for another service, but we keep it here so nothing is left out.

Why Microsoft Stock Might Break Out After July 29

AI Spending Paying Off

The worry: Some investors thought Microsoft was spending too much on Artificial Intelligence (AI) — that’s when computers do smart, human‑like tasks. In April, Microsoft said it would spend $190 billion in its fiscal 2026 (the year ending June 2026) on things like buildings and machines (called capital expenditure). That is 61% more than the year before.

What happened earlier: In the quarter ending March 31 (called fiscal Q3), the stock dropped because people were concerned about Microsoft’s exclusive partnership with OpenAI (an AI research company) and heard reports that the AI work wasn’t profitable yet. Microsoft’s Azure (its cloud service that powers AI for other businesses) grew just a tiny bit slower than before.

But here are the strong signs the AI bets are starting to pay off:

• Azure revenue (money from sales) rose 40% in fiscal Q3, beating what experts guessed.
• Overall cloud revenue grew 29%, better than the 25% growth in Q2.
• Microsoft had $627 billion in “backlog” (orders customers promised to pay for later) in Q3 — that’s up 99% from the same quarter last year.
• Management says Azure will grow about 40% in Q4, showing “modest acceleration” in the second half of the year.

Why is growth coming back? Microsoft is building data centers (huge warehouses full of computers) to handle high demand.
CEO Satya Nadella said: “We are moving aggressively to add capacity aligned to our demand signals we see.”
CFO Amy Hood explained it like this: “I think it’s probably better to think about the Azure guidance that we give as an allocated capacity guide about what we can deliver in Azure revenue.” In plain English: they are building only because real customers want it, not just because they hope customers will show up.

Callout – Real AI Money: Nadella also said Microsoft’s AI business now has an annual revenue run rate of $37 billion (the amount it would make in a year at today’s pace) — that’s up 123% from last year. This is actual money, not just guesses.

Microsoft’s Stock Is Cheap Right Now

• Microsoft recently changed its deal with OpenAI: OpenAI is no longer its only AI provider, and Microsoft no longer shares revenue with OpenAI. This lowers Microsoft’s risk and opens doors to new income.
• Microsoft should also get a money boost from updated prices and packages for its software (like Office) because many clients are starting a new five‑year payment cycle.
• The stock is historically cheap:
  • It trades at 22 times earnings (Price‑to‑Earnings or P/E — how many dollars you pay for $1 of profit) and 19 times forward earnings (expected future profit).
  • That is below the S&P 500 average (the S&P 500 is a list of 500 big U.S. companies).
  • It’s around the cheapest Microsoft has been since 2018; the only time since then that P/E was lower was this past March (21).

What do experts think?

• About 95% of analysts rate Microsoft stock a “buy.”
• The median price target is $550 per share, suggesting 41% upside over the next 12 months.
• If Microsoft shows a strong Q4 on July 29 and gives a robust outlook (which the author expects), it could be the launching pad for a solid stock run.

Important: “Screaming buy” is just a colorful way to say many people think the stock is a great deal at today’s low price.

Should You Buy Microsoft Stock Right Now?

Before you buy, the original article asks you to consider this:

• The Motley Fool’s Stock Advisor team picked what they believe are the 10 best stocks to buy now — and Microsoft was not one of them. Those 10 are chosen for long‑term growth and could make big returns.
• For example: if you had invested $1,000 in Netflix when they recommended it on Dec 17, 2004, you’d have $395,679 today. If you did the same for Nvidia on Apr 15, 2005, you’d have $1,294,805.
• Stock Advisor has a track record of beating the S&P 500 by 4 times, so people listen. They suggest you look at their latest top‑10 list.

Stock Advisor returns as of July 14, 2026.

Disclosure: The author (Dave Kovaleski) owns no shares of the companies mentioned. The Motley Fool owns and recommends Microsoft. (Original article: “Prediction: Microsoft Stock Could Go Parabolic After July 29. Here’s Why.” published by The Motley Fool. Image source: Getty Images.)

Summary

• Microsoft reports fiscal Q4 earnings on July 29, 2026 — a key date for the stock.
• The stock is down 20% year‑to‑date, but its AI investments show real payoff: Azure grew 40%, AI run‑rate hit $37B (up 123%), and backlog is $627B (up 99%).
• Microsoft’s deal with OpenAI was revised to reduce risk, and software pricing should help revenue.
• The stock is cheap: P/E 22, below S&P 500 average; analysts see 41% upside to $550.
• A strong July 29 report could spark a big rally.
• However, Motley Fool’s Stock Advisor top‑10 list excludes Microsoft and highlights past huge winners like Netflix and Nvidia.
• Always do your own research before investing.

FAQ

1. What does “fiscal fourth quarter” mean?
It’s the last three‑month slice of a company’s financial year — like the final term of school before the yearly report card.

2. What is Azure, in kid terms?
Azure is Microsoft’s “cloud” service: instead of buying your own computers, businesses rent space and AI power from Microsoft’s giant computer warehouses over the internet.

3. Why do people say Microsoft stock is “cheap”?
Its price compared to the profit it makes (P/E ratio) is 22, which is lower than many other big companies and lower than its own historical norm.

4. What is the “Magnificent Seven”?
A friendly nickname for seven very large tech stocks that often move the market together; Microsoft is one of them.

5. Should I immediately buy Microsoft stock after reading this?
Not blindly. The article itself notes that a popular stock‑picking service left Microsoft off its top‑10 list, and all investing carries risk. Learn the facts, then decide.