Microsoft (MSFT) AI Stock Analysis

• Market Cap: $3.79T
• Dividend Yield: 0.65%
• Average Volume (3M): 18.10M
• Price to Earnings (P/E): 39.4
• Beta (1Y): 1.01
• Revenue Growth: 14.13%
• EPS Growth: 12.10%
• Country: US
• Employees: 228,000
• Sector: Technology
• Sector Strength: 94
• Industry: Software - Infrastructure
• EPS (TTM): 3.46
• Shares Outstanding: 7,432,544,000
• 10 Day Avg. Volume: 15,829,921
• 30 Day Avg. Volume: 18,098,486
• PEG Ratio: 9.28
• Price to Book (P/B): 11.62
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 53.90
• Enterprise Value/Market Cap: 0.99
• Enterprise Value/Revenue: 3.66
• Enterprise Value/Gross Profit: 20.22
• Enterprise Value/Ebitda: 6.67
• 1Y Price Target: $545.17
• Price Target Upside: 6.89% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 34

• Rating: 83 Outperform
• Price Target: $558.00 ▲(9.40%Upside)

Microsoft's overall stock score is driven by its strong financial performance and positive earnings call sentiment. The company benefits from consistent revenue growth and high profitability, supported by effective cash flow management and a solid balance sheet. Technical indicators show positive momentum, although overbought conditions suggest caution. The high P/E ratio reflects market confidence but also hints at potential overvaluation. Continued strength in cloud and AI services positions Microsoft well for future growth.

Positive Factors

AI Leadership

Microsoft's AI leadership and relationship with OpenAI continues to serve as a competitive differentiator against other hyperscalers.

Azure Growth

Azure is becoming a greater mix of revenue, growing over 30%.

Copilot Adoption

Ramping Copilot cycle is seen as the next catalyst for growth.

Negative Factors

Stock Valuation

The stock is up 30% and trades at a premium versus peers, with sentiment and the multiple holding.

Microsoft Business Overview & Revenue Model

Company Description

Microsoft Corporation develops, licenses, and supports software, services, devices, and solutions worldwide. The company operates in three segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The Productivity and Business Processes segment offers Office, Exchange, SharePoint, Microsoft Teams, Office 365 Security and Compliance, Microsoft Viva, and Skype for Business; Skype, Outlook.com, OneDrive, and LinkedIn; and Dynamics 365, a set of cloud-based and on-premises business solutions for organizations and enterprise divisions. The Intelligent Cloud segment licenses SQL, Windows Servers, Visual Studio, System Center, and related Client Access Licenses; GitHub that provides a collaboration platform and code hosting service for developers; Nuance provides healthcare and enterprise AI solutions; and Azure, a cloud platform. It also offers enterprise support, Microsoft consulting, and nuance professional services to assist customers in developing, deploying, and managing Microsoft server and desktop solutions; and training and certification on Microsoft products. The More Personal Computing segment provides Windows original equipment manufacturer (OEM) licensing and other non-volume licensing of the Windows operating system; Windows Commercial, such as volume licensing of the Windows operating system, Windows cloud services, and other Windows commercial offerings; patent licensing; and Windows Internet of Things. It also offers Surface, PC accessories, PCs, tablets, gaming and entertainment consoles, and other devices; Gaming, including Xbox hardware, and Xbox content and services; video games and third-party video game royalties; and Search, including Bing and Microsoft advertising. The company sells its products through OEMs, distributors, and resellers; and directly through digital marketplaces, online stores, and retail stores. Microsoft Corporation was founded in 1975 and is headquartered in Redmond, Washington.

How the Company Makes Money

Microsoft makes money through a diverse revenue model that includes several key streams. The company earns significant income from its Productivity and Business Processes segment, which includes Microsoft Office subscriptions and LinkedIn. The Intelligent Cloud segment generates revenue from Azure, the company's cloud computing platform, as well as from server products and enterprise services. Additionally, Microsoft benefits from its More Personal Computing segment, which encompasses Windows licensing, Surface devices, and gaming, including Xbox hardware and software sales. Microsoft also engages in strategic partnerships and acquisitions that enhance its product offerings and expand its market reach, contributing to its overall earnings.

Microsoft Financial Statement Overview

Summary

Microsoft's financial performance is robust, characterized by strong profitability, efficient cost management, and solid financial position. The income statement reflects high margins and consistent revenue growth. The balance sheet shows prudent leverage with a low debt-to-equity ratio, and cash flow analysis highlights effective cash generation, supporting future investments and shareholder returns.

Income Statement

Microsoft's income statement shows strong profitability with a TTM (Trailing-Twelve-Months) gross profit margin of 69.1% and a net profit margin of 35.8%. Revenue growth has been consistent, with a 10.1% increase from the previous annual report. The EBIT and EBITDA margins are robust at 45.2% and 52.4% respectively, indicating effective cost management and operational efficiency.

Balance Sheet

The balance sheet reflects a strong financial position with a low debt-to-equity ratio of 0.19, suggesting prudent leverage management. Return on Equity (ROE) is commendable at 30% in the TTM, highlighting effective use of shareholders' equity. The equity ratio of 57.2% indicates a solid capital structure, providing stability and financial flexibility.

Cash Flow

Cash flow analysis indicates a healthy cash generation capability, with a free cash flow to net income ratio of 0.72 and an operating cash flow to net income ratio of 1.35. Free cash flow growth has been strong, showcasing Microsoft's ability to generate cash after capital expenditures, supporting further investments and shareholder returns.

Breakdown	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement
Total Revenue	245.12B	211.91B	198.27B	168.09B	143.01B
Gross Profit	171.01B	146.05B	135.62B	115.86B	96.94B
EBITDA	133.01B	105.14B	100.24B	85.13B	68.42B
Net Income	88.14B	72.36B	72.74B	61.27B	44.28B
Balance Sheet
Total Assets	512.16B	411.98B	364.84B	333.78B	301.31B
Cash, Cash Equivalents and Short-Term Investments	75.53B	111.26B	104.75B	130.26B	136.53B
Total Debt	67.13B	59.97B	61.27B	67.78B	71.00B
Total Liabilities	243.69B	205.75B	198.30B	191.79B	183.01B
Stockholders Equity	268.48B	206.22B	166.54B	141.99B	118.30B
Cash Flow
Free Cash Flow	74.07B	59.48B	65.15B	56.12B	45.23B
Operating Cash Flow	118.55B	87.58B	89.03B	76.74B	60.67B
Investing Cash Flow	-96.97B	-22.68B	-30.31B	-27.58B	-12.22B
Financing Cash Flow	-37.76B	-43.94B	-58.88B	-48.49B	-46.03B

Microsoft Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 510.05
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MSFT, the sentiment is Positive. The current price of 510.05 is above the 20-day moving average (MA) of 497.87, above the 50-day MA of 475.35, and above the 200-day MA of 426.83, indicating a bullish trend. The MACD of 10.48 indicates Positive momentum. The RSI at 73.53 is Negative, neither overbought nor oversold. The STOCH value of 83.65 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MSFT.

Microsoft Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MSFT	83 Outperform	$3.79T	39.41	33.61%	0.65%	14.13%	12.10%
ADBE	76 Outperform	$155.17B	23.39	52.25%	―	10.69%	40.10%
ORCL	75 Outperform	$689.43B	56.53	85.36%	0.81%	8.38%	16.96%
FTNT	74 Outperform	$80.69B	43.39	205.91%	―	13.83%	58.13%
PANW	74 Outperform	$130.55B	112.03	21.16%	―	13.91%	-50.96%
CRWD	74 Outperform	$118.63B	721.64	-5.76%	―	25.94%	-226.80%
Sector *	63 Neutral	$34.60B	5.43	-11.64%	1.84%	5.30%	-18.55%

Microsoft Corporate Events

Microsoft Updates Bylaws to Enhance Shareholder Engagement

Microsoft Corporation’s Board of Directors has amended the company’s Bylaws, effective July 1, 2025, to introduce a cure process for deficiencies in director nomination notices submitted by shareholders. This change allows shareholders to rectify any issues in their nomination notices within a specified time, potentially impacting shareholder engagement and governance practices.

The most recent analyst rating on (MSFT) stock is a Buy with a $511.00 price target. To see the full list of analyst forecasts on Microsoft stock, see the MSFT Stock Forecast page.