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Microsoft
(NASDAQ:MSFT)
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Rating:80Outperform
Price Target:
$429.00
▲(11.91% Upside)
Action:Reiterated
Date:05/15/26
The score is driven primarily by exceptional financial quality (high and resilient profitability, strong balance sheet) and a constructive earnings outlook for cloud/AI growth. Offsetting factors include heavy AI-related investment reducing near-term free cash flow and margins, plus a mixed technical setup with the stock below several key moving averages.
Positive Factors
Conservative balance sheet
Very low leverage and ample equity provide long-term financial flexibility to fund multi-year AI/cloud investments, absorb cyclicality, and continue shareholder returns without stressing liquidity. This conservatism reduces financing risk and supports strategic optionality over 2–6 months and beyond.
Negative Factors
Very large, multi-year CapEx burden
Extremely high and front-loaded capital spending materially depresses near-term free cash flow and FCF conversion. The scale and duration of CapEx elevate execution and return-risk: if revenue or pricing trends soften, recovery of these investments could take longer and constrain discretionary spending.
Read all positive and negative factors
Positive Factors
Negative Factors
Conservative balance sheet
Very low leverage and ample equity provide long-term financial flexibility to fund multi-year AI/cloud investments, absorb cyclicality, and continue shareholder returns without stressing liquidity. This conservatism reduces financing risk and supports strategic optionality over 2–6 months and beyond.
Read all positive factors
Microsoft Key Performance Indicators (KPIs)
Any
Cloud Revenue
Tracks revenue from cloud services, reflecting Microsoft's growth in a critical and expanding market segment.
Tracks revenue from cloud services, reflecting Microsoft's growth in a critical and expanding market segment.
Data provided by:
The Fly
The FlyMicrosoft (MSFT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.86T
Dividend Yield0.93%
Average Volume (3M)42.60M
Price to Earnings (P/E)23.5
Beta (1Y)1.08
Revenue Growth17.87%
EPS Growth29.63%
CountryUS
Employees228,000
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)16.85
Shares Outstanding7,428,434,600
10 Day Avg. Volume30,777,248
30 Day Avg. Volume42,601,415
Financial Highlights & Ratios
PEG Ratio2.34
Price to Book (P/B)10.76
Price to Sales (P/S)13.12
P/FCF Ratio51.63
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$559.63Price Target Upside45.99% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering36
EPS Forecast (FY)19.44
Revenue Forecast (FY)$384.41B
Microsoft Business Overview & Revenue Model
Company Description
Microsoft Corporation is a prominent global technology firm that invents, markets, and provides ongoing assistance for a diverse range of software, digital services, computing devices, and comprehensive solutions. Its operations are organized into...
How the Company Makes Money
Microsoft primarily makes money by selling subscriptions, cloud services, software licenses, advertising, and hardware/gaming content across three major reporting segments. (1) Productivity and Business Processes: Revenue comes largely from recurr...
Microsoft Earnings Call Summary
Earnings Call Date:Apr 29, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Jul 29, 2026
Earnings Call Sentiment Positive
The call presented a strong, growth-focused narrative: record cloud and AI revenue, very large AI ARR growth (123%), rapid Copilot and developer adoption (20M Copilot seats, 250% seat-add growth), and substantial product and infrastructure progress. Those positives are tempered by meaningful margin and expense pressure from accelerated AI investments, very large near-term capital expenditures with supply constraints, booking volatility tied to OpenAI commitments and model transitions, and weakness in parts of More Personal Computing (OEM/devices and gaming). Management emphasized execution on capacity, efficiency gains, and a multi-year view on ROI from AI investments.Positive Updates
Record Quarterly Revenue and Earnings
Revenue of $82.9 billion for the quarter and diluted EPS of $4.27, with management stating results exceeded expectations across revenue, operating income, and EPS.
Negative Updates
Margin Pressure from AI Investments
Company gross margin percentage declined to 68% year over year and Microsoft Cloud gross margin moved to ~66%, both negatively impacted by continued heavy investment in AI infrastructure and growing AI product usage.
Read all updates
Q3-2026 Updates
Positive
Negative
Record Quarterly Revenue and Earnings
Revenue of $82.9 billion for the quarter and diluted EPS of $4.27, with management stating results exceeded expectations across revenue, operating income, and EPS.
Read all positive updates
Company Guidance
Microsoft guided Q4 revenue of $86.7–$87.8B (growth 13%–15%), COGS of $29.4–$29.6B (growth 22%–23%, including ~$350M of the ~$900M one‑time voluntary retirement cost), and operating expense of $19.3–$19.4B (≈7% growth, including ~$550M retirement); adjusted Q4 tax rate ~19% and excluding OpenAI other income/expense ≈ –$100M. Segment guidance included Productivity & Business Processes $37.0–$37.3B (12%–13% growth), Microsoft 365 Commercial cloud adj. growth 15%–16% CC (13%–14% reported CC), Microsoft 365 Consumer low‑20% growth, LinkedIn ≈10%, Dynamics 365 low‑double digits; Intelligent Cloud $37.95–$38.25B (27%–28% growth) with Azure growth of 39%–40% CC; More Personal Computing $11.75–$12.25B with Windows OEM and devices down mid‑to‑high teens, Search ex‑TAC high single‑digit growth, Xbox content & services down low teens. They expect Microsoft Cloud gross margin ≈64%, FX to add ~1 point to P&BP and MPC revenue (overall <1 point) and ~1 point to COGS growth, Q4 CapEx > $40B (≈$5B of which reflects higher component pricing), calendar‑2026 CapEx ≈ $190B (≈$25B from pricing), FY‑26 operating margin up ~1 point YoY, continued headcount decline, and Azure capacity constraints persisting through 2026 with modest acceleration in H2 of the calendar year.Microsoft Financial Statement Overview
Summary
Income Statement
Balance Sheet
Cash Flow
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 318.27B | 281.72B | 245.12B | 211.91B | 198.27B | 168.09B |
| Gross Profit | 217.41B | 193.89B | 171.01B | 146.05B | 135.62B | 115.86B |
| EBITDA | 200.96B | 160.16B | 133.01B | 105.14B | 100.24B | 85.13B |
| Net Income | 125.22B | 101.83B | 88.14B | 72.36B | 72.74B | 61.27B |
Balance Sheet | ||||||
| Total Assets | 694.23B | 619.00B | 512.16B | 411.98B | 364.84B | 333.78B |
| Cash, Cash Equivalents and Short-Term Investments | 78.27B | 94.56B | 75.53B | 111.26B | 104.75B | 130.26B |
| Total Debt | 125.43B | 112.18B | 97.85B | 79.44B | 78.40B | 82.28B |
| Total Liabilities | 279.86B | 275.52B | 243.69B | 205.75B | 198.30B | 191.79B |
| Stockholders Equity | 414.37B | 343.48B | 268.48B | 206.22B | 166.54B | 141.99B |
Cash Flow | ||||||
| Free Cash Flow | 72.92B | 71.61B | 74.07B | 59.48B | 65.15B | 56.12B |
| Operating Cash Flow | 170.14B | 136.16B | 118.55B | 87.58B | 89.03B | 76.74B |
| Investing Cash Flow | -115.24B | -72.60B | -96.97B | -22.68B | -30.31B | -27.58B |
| Financing Cash Flow | -51.61B | -51.70B | -37.76B | -43.94B | -58.88B | -48.49B |
Microsoft Technical Analysis
Neutral
383.34
Price Trends
401.88
Negative
398.57
Negative
438.98
Negative
Market Momentum
-2.91
Negative
53.54
Neutral
74.28
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MSFT, the sentiment is Neutral. The current price of 383.34 is above the 20-day moving average (MA) of 380.05, below the 50-day MA of 401.88, and below the 200-day MA of 438.98, indicating a neutral trend. The MACD of -2.91 indicates Negative momentum. The RSI at 53.54 is Neutral, neither overbought nor oversold. The STOCH value of 74.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for MSFT.
Microsoft Risk Analysis
Microsoft disclosed 46 risk factors in its most recent earnings report. Microsoft reported the most risks in the "Tech & Innovation" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Microsoft Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $4.62T | 39.51 | 146.69% | 0.41% | 12.76% | 28.91% | |
80 Outperform | $2.86T | 23.48 | 33.13% | 0.93% | 17.87% | 29.63% | |
78 Outperform | $4.36T | 28.02 | 38.98% | 0.26% | 17.77% | 46.22% | |
76 Outperform | $87.76B | 12.83 | 62.39% | ― | 11.49% | 11.45% | |
70 Outperform | $2.66T | 30.03 | 23.34% | ― | 14.22% | 35.55% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
58 Neutral | $368.53B | 22.31 | 50.38% | 1.00% | 17.35% | 32.98% |
* Technology Sector Average
MSFT
Microsoft
395.63
-112.01
-22.07%
ADBE
Adobe
224.56
-141.89
-38.72%
AMZN
Amazon
254.96
31.08
13.88%
AAPL
Apple
327.50
118.31
56.56%
GOOGL
Alphabet Class A
370.92
187.86
102.63%
ORCL
Oracle
132.49
-113.46
-46.13%
Microsoft Corporate Events
Executive/Board ChangesShareholder MeetingsBusiness Operations and Strategy
Microsoft Announces Planned Board Transition as Hoffman Departs
Neutral
Jun 5, 2026
Microsoft announced that Reid Hoffman, who has served on its Board of Directors since 2017, informed the company on June 2, 2026, that he will not stand for re-election at the 2026 annual shareholder meeting. He will remain on the board until the ...
Executive/Board Changes
Microsoft Adds Carmine Di Sibio to Board
Positive
May 14, 2026
On May 14, 2026, Microsoft announced the appointment of Carmine Di Sibio, former global chairman and CEO of EY, to its board of directors, effective May 13, 2026, expanding the board to 13 members. Di Sibio will serve on the Audit and Compensation...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.