Skip to navigationSkip to main contentSkip to right columnADVERTISEMENTStefon Walters, The Motley FoolSun, August 2, 2026 at 1:20 AM GMT+2 4 min readIt has been a tough start to the year for Microsoft's (NASDAQ: MSFT) stock, but after it reported earnings for its fiscal year 2026 (ended June 30), the stock rallied, with a single-day jump of 15%. The stock is still in the red for the year, but it's up 27% from the 52-week low it hit on June 25 and has a lot of momentum on its side.There's much to be encouraged about from Microsoft's earnings report, but is now the right time to invest after a sudden surge? It comes down to your reason for investing, but for long-term investors, it's still a great go-to.Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »Microsoft is slowly quieting spending concernsMuch of Microsoft's stock troubles this year can be tied back to its artificial intelligence (AI) spending (current and planned). Many investors weren't convinced that Microsoft's capital expenditures (capex) would translate to a solid return on investment. And although we're still a ways from knowing whether they will, Microsoft's latest results show glimpses of progress.Microsoft Azure revenue increased 41% year over year (YOY) and crossed the $100 billion annual revenue mark for the first time ever, and Microsoft Cloud revenue increased 27% YOY to over $214 billion. Its AI dealings are more than just cloud, but that's a good indicator that Microsoft is getting a return on its investment.Microsoft's $678 billion cloud backlog is also a sign that demand remains high, though a large chunk of it is tied to OpenAI. That's not ideal, but the backlog grew 25% YOY even without OpenAI.Image source: The Motley Fool.Microsoft's consumer businesses aren't doing too wellWhile AI and cloud performance will get much of the attention, it's worth pointing out that Microsoft has other segments headed in the opposite direction. In this most recent quarter, its "more personal computing" segment's revenue dropped 4% YOY, Xbox hardware sales dropped 13%, and Windows OEM/devices revenue fell 7%.These businesses aren't nearly as important to Microsoft's growth as cloud and its other AI ambitions, but they're worth keeping an eye on nonetheless.Should you buy Microsoft right now?If you buy Microsoft right now, don't let it be because of the current rally. Although not to this extent, we've seen Microsoft's stock rally a couple of times this year -- 14% between April 10 and April 17, and over 11% between May 27 and June 1 -- and it retreated both times. This doesn't mean it'll happen again, but rather that rallies aren't forever.Terms and Privacy PolicyEU DSA contactPrivacy & Cookie SettingsMore Info