What was Microsoft's compound annual growth rate (CAGR) since 2005?

Microsoft's CAGR from 2005 to September 2026 was 16.5% per year. For comparison, the S&P 500 has historically averaged around 10% annually. Microsoft significantly outperformed traditional equity markets on an annualized basis.

How does Microsoft compare to the S&P 500 since 2005?

The same $1,000 invested in an S&P 500 index fund in 2005 would be worth approximately $9,559.12 today. Microsoft outperformed the index by $18,101.75 — 2.89x the return of the S&P 500.

How much of the Microsoft gain would you keep after taxes?

Sold today, the $26,660.87 gain would be a long-term capital gain for US federal tax. At the 15% rate most people pay, you'd keep about $23,661.74. At the top rate of 23.8% (20% plus the 3.8% net investment income tax) you'd keep about $21,315.58, and lower incomes pay 0%. State tax is extra, and gains inside a Roth IRA aren't taxed.

What is the inflation-adjusted return on $1,000 in Microsoft since 2005?

Adjusted for cumulative US inflation since 2005, the real purchasing-power value of the Microsoft position is approximately $16,571.07 in 2005 dollars. Even after inflation, this is an extraordinary real return — inflation only marginally reduces gains of this magnitude.

How did Microsoft perform in 2005?

Microsoft rose 1.6% during 2005, from $18.40 at the start of the year to $18.70 at the start of 2006.

What If You Invested $1,000 in Microsoft in 2005?

Try your own numbers

If I had putintoat the start of…

it would be worth today

$27,661

+$26,661 profit27.7x16.5% a year

The same $1,000 in an S&P 500 index fund: $9,559

Its shares paid about $197.83 in dividends over the last 12 months.

Aftertax on the gain, you’d keep$23,662

US federal long-term rates: 15% for most people, 0% on lower incomes, 20% + 3.8% on high incomes. No state tax included; none inside a Roth IRA.

Compare with

Growth Over Time

Performance Metrics

Total Invested

$1,000.00

Current Value

$27,660.87

Total Profit

$26,660.87

Multiplier

27.7x

CAGR

16.5%

Max Drawdown

-54.9%

Inflation-Adjusted

$16,571.07

Benchmark Comparison

How does $1,000.00 invested in 2005 compare across different asset classes?

Asset	Value Today	Return
Microsoft	$27,660.87	27.7x
S&P 500	$9,559.12	9.56x
Gold	$9,689.66	9.69x
Savings (2% APY)	$1,538.16	1.54x

Dividends

Over the last 12 months, the 54.35 shares you'd own now paid about $197.83 in dividends (about $16.49 a month). That's 20% of the $1,000 put in.

Price growth alone turned $1,000 into $18,934; reinvested dividends added the other $8,727, 33% of the gain.

Dividends from Yahoo Finance. Shares today assume every dividend was reinvested.

Back in 2005

In November 2005, Microsoft launched the Xbox 360 in North America, with more than 4,500 retailers holding midnight events to sell the new console. news.microsoft.com
In 2005, a gallon of gas averaged $2.27 and a movie ticket averaged $6.41. eia.gov variety.com
During 2005 itself, Microsoft rose 1.6%, #45 of the 60 investments we track. The best was Apple (+136%); the worst was Ford (−45%). Full 2005 results →

$1,000 in Microsoft, year by year

Of the 60 investments we track that were available at the start of 2005, Microsoft ranks #14 by growth to today — just behind AMD and ahead of MicroStrategy. See the full 2005 ranking →

It was worth less than the $1,000 put in at the start of 2009, and has been above it since the start of 2010. Today's $27,661 is more than it was worth at any January since. It rose in 17 of the 21 full years since. It moved ahead of the same $1,000 in the S&P 500 at the start of 2015 and has stayed ahead since. Month by month, the deepest fall ran from Oct 2007 ($1,425) to Feb 2009 ($643.39), a drop of 55%. At its lowest month-end, in Feb 2009, it was worth $643.39.

When	Worth	Change	S&P 500
Start of 2005	$1,000	—	$1,000
Start of 2006	$1,016	+1.6%	$1,049
Start of 2007	$1,147	+13%	$1,215
Start of 2008	$1,371	+20%	$1,282
Start of 2009	$806	−41%	$807
Start of 2010	$1,256	+56%	$1,021
Start of 2011	$1,159	−7.7%	$1,175
Start of 2012	$1,138	−1.8%	$1,200
Start of 2013	$1,208	+6.1%	$1,392
Start of 2014	$1,674	+39%	$1,842
Start of 2015	$2,164	+29%	$2,095
Start of 2016	$2,605	+20%	$2,124
Start of 2017	$3,056	+17%	$2,378
Start of 2018	$4,291	+40%	$2,897
Start of 2019	$5,136	+20%	$2,770
Start of 2020	$8,289	+61%	$3,642
Start of 2021	$11,352	+37%	$4,312
Start of 2022	$17,603	+55%	$5,550
Start of 2023	$12,717	−28%	$4,544
Start of 2024	$19,860	+56%	$5,739
Start of 2025	$22,583	+14%	$7,175
Start of 2026	$25,541	+13%	$8,458
Today	$27,661	+8.3%	$9,559

Values at the start of each year (first trading day for stocks). The S&P 500 column includes reinvested dividends, like the stock values.

Historical Context

At the start of 2005, Microsoft was priced at $18.40 (adjusted for later splits and dividends). $1,000 would have bought about 54.35 shares. Microsoft makes Windows and Office and runs Azure, one of the largest cloud platforms.

Measured from one January to the next, Microsoft's best year since then was 2019 (+61%) and its worst was 2008 (−41%). Holding on wasn't easy: between the start of 2008 and the start of 2009, the position fell 41% from its high.

Frequently Asked Questions

A $1,000 investment in Microsoft at the start of 2005 would be worth approximately $27,660.87 today — a 27.7x return ($26,660.87 profit) over 21.7 years.

Methodology & Sources

Price data: Historical prices are the closing price on the first trading day of each year, adjusted for splits and dividends (so returns assume dividends were reinvested), from Yahoo Finance and MacroTrends. Current prices come from Yahoo Finance and refresh hourly; if that source is unavailable, the last saved price is used.

Calculation: Assumes a single purchase at the start of 2005 (or the first trading day, for companies that listed that year), held until today. No transaction fees, taxes, or slippage are included.

Benchmarks: The S&P 500 comparison uses the S&P 500 Total Return index (dividends reinvested, like an index fund) at the start of2005 and today. Gold uses the price per troy ounce. Savings account assumes a 2% APY compounded annually.

Inflation adjustment: Uses U.S. CPI-U annual averages from the Bureau of Labor Statistics. The 2026 CPI value is estimated.

Educational purposes only. Past performance does not guarantee future results. Not financial advice.