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Microsoft stock is trailing the S&P 500 for a third consecutive year so far in 2026—but the year is not over. In a dividend-reinvested comparison through October 5, 2026, Microsoft returned 9.28%, versus 14.51% for SPY, an ETF proxy for the index. Microsoft also lagged in 2024 and 2025. The two earlier three-year streaks, in 2003–2005 and 2010–2012, were followed by different results, so history offers context rather than a reliable forecast.
How far behind is Microsoft in 2026?
The comparison below uses calendar-year total returns, which include dividends. The 2026 figures are year to date through October 5, not full-year results. The S&P 500 figures use SPY as a proxy, rather than a directly calculated index series. The annual comparison page says its unadjusted chart data reinvests dividends: Total Real Returns: MSFT versus SPY.
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| Period | Microsoft total return | S&P 500 comparison |
|---|---|---|
| 2024 | +12.93% | +24.89% |
| 2025 | +15.58% | +17.72% |
| 2026 year to date through October 5 | +9.28% | +14.51% |
The 2026 gap is a snapshot, not a completed annual result; returns can change before the calendar year ends. Using total return matters because dividends are part of what shareholders receive. The Motley Fool article’s author, Daniel Sparks, explained his method this way: “I’m using total return for every year here, because it counts dividends.” Microsoft’s $3-per-share special dividend announced in 2004 is one reason a price-only comparison can misrepresent shareholder performance.
What happened after Microsoft’s previous three-year losing streaks?
The two previous three-year periods in which Microsoft lagged the S&P 500, identified since the company’s 1986 public listing, were 2003–2005 and 2010–2012. The rounded returns and subsequent years show two notably different paths.
#1 Best Overall
| Period | Microsoft total return | S&P 500 comparison | What followed |
|---|---|---|---|
| 2003–2005 | Roughly +15% cumulative | Roughly +50% cumulative | In 2006, each returned about 16%; in 2007, Microsoft returned about 21% versus about 5% for the index. |
| 2010–2012 | Roughly −6% cumulative | Roughly +36% cumulative | In 2013, Microsoft returned about 44% versus about 32% for the index. |
These are rounded historical total-return figures reported in the article matching the topic’s headline; its discussion of the two streaks and the valuations at their endpoints is at The Motley Fool. The comparison table’s S&P 500 series uses SPY, an ETF proxy, and should not be mistaken for a price-only index series.
Why the previous rebounds do not predict the next one
Microsoft outperformed in the year after each earlier streak, but the scale and context differed: after the first run, 2006 was close to a tie before Microsoft’s stronger 2007; after the second, Microsoft’s 2013 return was higher than the index’s. Two examples are too few to establish a pattern or imply that 2027 will bring a rebound.
Rank #2
The Motley Fool author points to valuation as one possible part of the difference. At the end of the 2003–2005 streak, the article estimates Microsoft traded at roughly 23 times fiscal 2005 earnings. At the end of 2010–2012, it estimates roughly 13 times reported fiscal 2012 earnings, or under 10 times on the article’s adjusted figure. These are the author’s calculations, not a rule that determines what happens after a future streak.
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Why another return comparison can show a different result
Returns depend on the measurement window. Microsoft’s 2025 annual report presents a fiscal-year comparison: $100 invested on June 30, 2020, with dividends reinvested, grew to $255.13 in Microsoft by June 30, 2025; the same investment in the S&P 500 grew to $215.89. That is a cumulative return over a fiscal-year window, not a contradiction of Microsoft’s calendar-year underperformance in 2024 and 2025. See the Microsoft 2025 annual report.
For a fair comparison, match the dates and use the same return definition for both investments. A price-only series excludes dividends; a total-return series includes them, and a year-to-date figure needs its “as of” date. Those choices can change what a chart says, especially when the period includes a large dividend.
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