Why Microsoft Stock Soared 10.2% Higher Last Month and Has Kept Rallying in May

Microsoft (NASDAQ: MSFT) stock posted double-digit gains in April's trading. The tech giant's share price gained 10.2% in a month that saw the S&P 500 gain 10.4% and the Nasdaq Composite rally 15.3%.

Following some big pullbacks earlier in the year, Microsoft's valuation surged last month amid strong bullish momentum for the broader market. The company also published its quarterly results at the end of the month, but investors were mixed on the report.

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On the heels of bearish pressures across the first three months of the year, Microsoft saw rebound momentum last month as tech-sector investments came back into favor with investors. The rally in the sector was driven by hopes for a resolution to the Iran war and some better-than-expected macroeconomic data.

On April 29, Microsoft published its results for the third quarter of its 2026 fiscal year -- which ended March 31. The company recorded non-GAAP (adjusted) earnings per share of $4.27 on sales of $82.89 billion in the period, which beat the average analyst estimate's call for adjusted earnings of $4.06 per share on sales of $81.39 billion. Sales were up 18% year over year in the quarter, and earnings per share were up roughly 23% compared to the prior-year period.

Despite the sales and earnings beats, some aspects of the company's forward guidance came in below expectations -- and the stock actually lost ground in the immediate aftermath of the report. In the current quarter, Microsoft is guiding for sales between $86.7 billion and $87.8 billion -- with the midpoint falling short of the previous average analyst estimate's call for revenue of $87.53 billion. Meanwhile, guidance for an adjusted operating margin of 44% this quarter also came in below the average analyst estimate's target for a margin of 44.6%.On the other hand, Microsoft stock has been gaining ground in May's trading.

As of this writing, Microsoft stock is up roughly 2.1% in May. Meanwhile, the S&P 500 has risen roughly 2.3%, and the Nasdaq Composite is up 4.2%.

Despite the double-digit gain last month, Microsoft is still down 14% across 2026's trading. While the company remains one of the strongest overall players in the artificial intelligence space, some investors are concerned that the business could face disruption from rivals' AI technologies. Trading could be bumpy in the near term, but Microsoft continues to look like a worthwhile long-term investment.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool has a disclosure policy.

Why Microsoft Stock Soared 10.2% Higher Last Month and Has Kept Rallying in May was originally published by The Motley Fool