Microsoft Corporation

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Very Bullish +85

How Microsoft Pulled off ‘One of the Best Tech Acquisitions of the Last Decade’

🚀 Analyst Trey Lockerbie from We Study Billionaires describes Microsoft's $7.5 billion GitHub acquisition as perhaps one of the best tech deals of the last decade.

📅 The deal was announced in June 2018 and closed in October, with Microsoft shares subsequently returning 340% to reach a market cap of roughly $3.08 trillion.

💼 CEO Satya Nadella highlighted unprecedented growth in GitHub driven by agentic coding during the Q3 FY2026 earnings call.

📈 Nearly 140,000 organizations now use GitHub Copilot in Enterprise, representing a tripled year-over-year adoption rate.

⚙️ Usage of the GitHub Copilot CLI is nearly doubling month over month as developers increasingly integrate AI tools into their workflows.

💰 Microsoft reported Q3 FY26 revenue of $82.89 billion (up 18% YoY) and EPS of $4.27, beating analyst estimates by $0.20.

🧠 The company's AI business surpassed an annualized revenue run rate of $37 billion, reflecting a massive 123% year-over-year increase.

☁️ Azure cloud revenue grew by 40% in the quarter as developers leveraging GitHub find it easier to deploy on Microsoft’s Azure platform.

🔄 A $344 billion backlog was reported with non-OpenAI committed revenue growing 28%, signaling a healthy pipeline beyond current AI partnerships.

📉 On June 1, 2026, GitHub Copilot will switch to usage-based pricing, which the CFO warned may cause temporary Q4 margin pressure but is expected to accelerate long-term revenue.

🧑‍💻 With 100 million registered developers on GitHub, Microsoft has secured a massive distribution channel for its cloud and AI services.

⏱️ Productivity gains from GitHub Copilot allow developers to write code 20 to 30 times faster, directly impacting product shipping times.

📊 Retail investor sentiment on Reddit is currently neutral (composite index 50.01) despite strong analyst consensus with a target price of $559.85.

🛡️ Analyst ratings show overwhelming confidence with 51 Buy/Strong Buy ratings compared to zero Sell ratings and only three Hold ratings.

🔄 There remains a strategic disconnect between cautious retail sentiment and the fundamental strength of the developer flywheel driving growth.

Bullish Signals
  • Microsoft's GitHub acquisition, made for $7.5 billion in 2018, is credited as 'one of the best tech acquisitions of the last decade' and has generated a 340% stock return since closing.
  • The deal price of $7.5 billion now appears negligible against Microsoft's massive scale, with a market cap of roughly $3.08 trillion.
  • CEO Satya Nadella reported that GitHub Copilot usage in Enterprise has nearly tripled year over year to nearly 140,000 organizations.
  • GitHub Copilot CLI usage is currently nearly doubling month over month, indicating strong momentum.
  • For Q3 FY26, Microsoft reported revenue of $82.89 billion, an 18% increase year over year, alongside EPS of $4.27 which beat the $4.07 estimate.
  • The AI business surpassed an annual revenue run rate of $37 billion, representing a massive 123% year-over-year increase.
  • Commercial remaining performance obligations have hit $627 billion, up 99%, signaling robust future revenue visibility.
  • GitHub's ecosystem includes 100 million registered developers, creating significant scale for Microsoft's product offerings.
  • Azure cloud growth accelerated to 40% in the quarter, reinforcing the integration of GitHub users into the Microsoft Cloud stack.
  • Microsoft holds a $344 billion backlog with non-OpenAI committed revenue growing 28%, reflecting strong demand beyond AI partnerships.
  • Analyst sentiment remains overwhelmingly bullish with 51 Buy or Strong Buy ratings against zero Sell ratings, targeting a price of $559.85.
Risk Factors
  • Microsoft may face margin pressure in Q4 due to the upcoming shift to usage-based pricing for GitHub Copilot on June 1, 2026, as flagged by CFO Amy Hood.
  • Despite strong performance metrics, retail sentiment has cooled significantly with a composite index at 50.01 (Neutral), indicating potential divergence between market perception and internal growth drivers.
Full Analysis
Microsoft's acquisition of GitHub, announced in June 2018 for $7.5 billion and closed that October, is being hailed by analysts as one of the best tech acquisitions of the last decade due to its strategic impact on developer adoption and cloud growth. Host Trey Lockerbie highlighted the deal's value, noting that while the initial price is now a rounding error against Microsoft's scale, GitHub remains a critical channel for acquiring developers influencing cloud decisions and has evolved into the world's most adopted AI coding tool. The company reported Q3 FY2026 revenue of $82.89 billion, an 18% year-over-year increase with EPS of $4.27 beating estimates, while its AI business reached an annual run rate of $37 billion and commercial remaining performance obligations grew to $627 billion. The acquisition has fueled a "GitHub Flywheel" driven by scale, productivity gains, and seamless distribution to Microsoft's Azure cloud platform. CEO Satya Nadella emphasized unprecedented growth in GitHub Copilot within enterprise, with nearly 140,000 organizations using the tool, representing a tripling year-over-year. Brodersen noted that developers using GitHub and Visual Studio have a "path of least resistance" for deploying on Azure, which aligns with Azure's 40% growth in the quarter. This integration is further supported by a $344 billion backlog and non-OpenAI committed revenue growing 28%, indicating strong demand. Looking ahead, key catalysts include GitHub Copilot transitioning to usage-based pricing on June 1, 2026, which CFO Amy Hood expects will cause short-term Q4 margin pressure but act as a longer-term revenue accelerator. Despite cooler retail sentiment with a neutral Reddit index, the analyst consensus remains overwhelmingly positive with 51 Buy or Strong Buy ratings versus zero Sell ratings, and price targets set at $559.85. The thesis centers on the disconnect between cautious retail investors and the strong developer flywheel driving future growth for Microsoft's cloud and AI segments.