Microsoft shares have rallied 26% since reporting its fiscal 2026 fourth-quarter results on July 29. For a company with a market capitalization of $3.7 trillion, such a rapid gain in just two weeks is highly unusual, prompting many investors to question whether chasing the stock now means missing the boat.

The primary driver of this surge is a combination of a cheap valuation and reassuring earnings. Prior to the earnings release, Microsoft's forward price-to-earnings ratio dipped below 20x in early July to its lowest level in recent years, making the stock significantly undervalued relative to its business quality and growth prospects. This attracted a swift influx of capital once the earnings report was published.

Additionally, the earnings results provided ample reassurance. Azure cloud revenue grew 43% year-over-year, maintaining strong momentum, while the paid seats for its internal AI product, Copilot, surpassed 30 million, demonstrating progress in commercial adoption. Crucially, Microsoft maintained its full-year capital expenditure guidance unchanged. In contrast, both Amazon and Alphabet raised their already high data center spending expectations. Amid market concerns about potential overbuilding by AI giants, Microsoft's decision not to accelerate spending further was interpreted as more rational and restrained, which helped boost investor confidence.

Current Valuation: No Longer Cheap, but Not Yet a Bubble

After this rapid price increase, Microsoft's valuation has returned to a more reasonable range. It remains at the lower end of its own recent historical levels, but compared to some large-cap tech peers, it is no longer significantly undervalued. In other words, the opportunity to pick up the stock at a bargain price has passed. Over the short term, the stock has quickly recovered much of the undervaluation premium.

Is It Still Worth Buying Now?

From a long-term perspective, Microsoft remains a high-quality investment. Azure's high growth, the commercial advancement of Copilot, and its disciplined approach to AI infrastructure spending all support its potential to continue outperforming the market. However, from a short-term trading perspective, the 26% gain over the past two weeks has rapidly lifted the stock from a state of deep undervaluation. Expecting a similar explosive short-term performance is unrealistic.

The conclusion is clear: For long-term investors, Microsoft is still a worthwhile allocation, but one should accept it has moved from "deeply undervalued" to "reasonably priced to slightly expensive." Future value realization is more likely to come from steady growth than a sharp rally. For those seeking short-term gains, this rapid correction has significantly narrowed the window of opportunity. Simply put, the ship has not fully sailed, but the moment for a "half-price boarding" is over.