Microsoft Corporation

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Very Bullish +85

How Microsoft Pulled off ‘One of the Best Tech Acquisitions of the Last Decade’ - 24/7 Wall St.

📈 GitHub was acquired by Microsoft in October 2018 for $7.5 billion, a deal now viewed as one of the top tech acquisitions of the last decade.

📊 Since the acquisition closed, Microsoft shares have surged 340% to reach a market cap of roughly $3.08 trillion as of May 8.

💬 On the Q3 FY2026 earnings call, CEO Satya Nadella highlighted that GitHub is experiencing unprecedented growth driven by agentic coding tools.

🚀 Enterprise adoption of GitHub Copilot has nearly tripled year-over-year to include nearly 140,000 organizations.

📉 Q3 FY26 revenue reached $82.89 billion, representing an 18% increase year-over-year compared to analyst estimates.

🤖 The AI business segment surpassed a $37 billion annual revenue run rate, marking a 123% year-over-year growth.

📦 Commercial remaining performance obligations hit $627 billion, up 99% from the previous period.

👥 GitHub maintains a scale of 100 million registered developers, creating a dominant ecosystem for code collaboration.

⚡ Productivity gains from GitHub Copilot are estimated to allow developers to write code 20 to 30 times faster.

☁️ Azure cloud growth accelerated to 40% in the quarter due to the developer pipeline moving through GitHub and Visual Studio.

💰 A $344 billion backlog was reported, with non-OpenAI committed revenue growing 28% year-over-year.

📅 On June 1, 2026, GitHub Copilot will transition to a usage-based pricing model that may impact short-term margins.

📉 Reddit sentiment has cooled to a neutral index of 50.01 despite strong analyst consensus targets near $559.85.

🏆 Analyst ratings show overwhelming bullish sentiment with 51 Buy/Strong Buy ratings versus zero Sell ratings.

🔗 The integration creates a flywheel where developers using GitHub workflows naturally deploy into Microsoft Azure without friction.

📈 Full financial results for the quarter were released in the official Q3 FY26 8-K filing with the market now pricing in long-term growth.

Bullish Signals
  • Microsoft's GitHub acquisition, completed in October 2018 for $7.5 billion, has driven a 340% return on MSFT shares since closing, with the stock trading at $415.40 and a market cap of roughly $3.08 trillion.
  • CEO Satya Nadella highlighted unprecedented growth in GitHub Copilot Enterprise usage, which now serves nearly 140,000 organizations—tripling year over year—as developers adopt agentic coding tools.
  • GitHub Copilot CLI usage is doubling month over month, reinforcing the platform's momentum as a primary channel for acquiring developers who make cloud decisions.
  • Microsoft reported Q3 FY26 revenue of $82.89 billion, representing an 18% year-over-year increase, with EPS of $4.27 beating analyst estimates of $4.07.
  • The AI business surpassed an annual revenue run rate of $37 billion and grew 123% year over year, while commercial remaining performance obligations hit $627 billion, up 99%.
  • GitHub boasts a scale of 100 million registered developers, creating a massive flywheel that drives productivity by allowing developers to write code 20 to 30 times faster with Copilot.
  • Azure cloud results show strong growth of 40% in the quarter, supported by a $344 billion backlog and non-OpenAI committed revenue growing 28%.
  • Analyst sentiment remains robust with 51 Buy/Strong Buy ratings versus three Hold ratings, suggesting significant upside potential against a consensus target of $559.85.
Risk Factors
  • The GitHub acquisition price of $7.5 billion faces scrutiny as a potential rounding error, yet any future integration failures could significantly impact Microsoft's reputation for strategic precision.
  • CFO Amy Hood explicitly warns that the transition to usage-based pricing for GitHub Copilot on June 1, 2026, will cause immediate Q4 margin pressure before revenue acceleration is realized.
  • Analyst consensus targets $559.85 per share, yet current retail sentiment has cooled significantly with a Reddit composite index at 50.01 (Neutral), creating a disconnect that could lead to short-term stock volatility.
  • Market dynamics remain volatile despite bullish narratives, evidenced by the disconnect between institutional optimism (51 Buy ratings) and cautious retail positioning.
  • The reliance on 'developer flywheel' growth creates concentration risk if GitHub's competitive position weakens or if adoption rates plateau below expectations.
Full Analysis
On a recent episode of We Study Billionaires (TIP813), host Trey Lockerbie highlighted Microsoft's acquisition of GitHub as one of the best technology acquisitions of the last decade, citing an $7.5 billion deal announced in June 2018 and closed in October for that price. Since closing, MSFT shares have returned approximately 340%, trading at $415.40 as of May 8 with a market cap of roughly $3.08 trillion, making the original acquisition cost a rounding error against the company's current scale. During the Q3 FY2026 earnings call, CEO Satya Nadella emphasized that GitHub is experiencing unprecedented growth driven by agentic coding and artificial intelligence adoption, noting that nearly 140,000 organizations now use GitHub Copilot in Enterprise, which represents a tripling year over year. Additionally, GitHub Copilot CLI usage is nearly doubling month over month, while Microsoft reported Q3 FY26 revenue of $82.89 billion, an increase of 18% year over year, and earnings per share of $4.27 compared to the $4.07 analyst estimate. The AI business surpassed an annual revenue run rate of $37 billion, marking a 123% year-over-year increase, with commercial remaining performance obligations reaching $627 billion, up 99%. Lockerbie and host Brodersen identified three reinforcing dynamics behind the deal's success: scale through 100 million registered developers on the platform, productivity gains where GitHub Copilot allows developers to write code 20 to 30 times faster, and distribution advantages as developer workflows on GitHub and Visual Studio create a path of least resistance for deploying Microsoft Azure. These factors are reflected in Azure growth of 40% in the quarter and a non-OpenAI committed revenue backlog growing 28%, totaling $344 billion. Looking ahead, two catalysts are noted: GitHub Copilot will move to usage-based pricing on June 1, 2026, which CFO Amy Hood indicated may create margin pressure in Q4 but will act as a longer-term revenue accelerator. Analyst consensus targets the stock at $559.85 with 51 Buy or Strong Buy ratings versus three Hold and zero Sell ratings, suggesting a potential disconnect between retail caution and the underlying developer flywheel driving Microsoft's strategy.