Stock (Symbol) |
Microsoft (MSFT) |
Stock Price |
$436 |
Sector |
| Technology |
Data is as of |
| May 5, 2025 |
Expected to Report |
| July 28 |
Company Description |
 Microsoft Corporation develops and supports software, services, devices, and solutions. Its segments include Productivity and Business Processes, Intelligent Cloud, and More Personal Computing.
The Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. This segment includes Office Consumer, LinkedIn, dynamics business solutions, and Office Commercial. The Intelligent Cloud segment consists of public, private, and hybrid server products and cloud services that can power modern businesses and developers. This segment includes server products and cloud services, and enterprise services. The More Personal Computing segment consists of products and services that put customers at the center of the experience with its technology. This segment includes Windows, devices, gaming, and search and news advertising. Source: Refinitiv |
Sharek’s Take |
 Microsoft (MSFT) stock made a strong comeback after the company delivered accelerated profit growth of 18%. The company had delivered 10% growth in each of the past three quarters, and was expected to deliver 10% last qtr, so this improvement was welcomed by investors. Microsoft Cloud revenue rose 22% year-over-year, as more companies used AI and cloud tools to get more done, save money, and grow faster. To keep up with demand, Microsoft opened new data centers in 10 countries across 4 continents. The company also made AI more affordable and efficient, with GPUs deployed 20% faster and the cost per token cut by more than half. Azure, Microsoft’s cloud platform, saw 33% revenue growth and remained the top choice for big companies running major apps like VMware, SAP, and Oracle. Microsoft also made big progress in quantum computing with a project called Majorana 1, which marked an important step toward building practical quantum computers.
Founded in 1975, Microsoft develops and supports software, services, devices and solutions that help people in business. Products include computer operating systems such as Windows, productivity applications including Excel and Word, software development tools including Azure, computing devices with its Surface tablets, and video games with its Xbox devices. The company also owns the top social media site for business relationships in LinkedIn. Microsoft has three main divisions, which are listed below, with each bringing in around 1/3rd of revenue. Here’s the breakdown of last qtr’s sales growth by division (note commercial cloud isn’t listed:
Microsoft (MSFT) a growth stock that’s also a safe stock. MSFT is one of only two companies to hold a AAA credit rating. The other is Johnson & Johnson. The stock has a solid Estimated Long-Term Growth Rate of 14% a year, a dividend yield of 1%, and a stock buyback program. The dividend has been increasing every year since 2006. MSFT is part of the Conservative Growth Portfolio, and Growth Portfolio. These results make MSFT a growth stock once again. |
One Year Chart |
 This stock was trending lower with profit growth coming in at just 10% a quarter. But last qtr’s 18% growth was a game-changer. Growth stocks need to grow profits at least 15% in my opinion. 20% is preferred. This 18% growth is a big deal.
The P/E of 29 is below where it should be. I think the P/E should be 35. The Est. LTG is 14%, up from 13% last qtr. This is a decent growth rate for a safe stock. Notice qtrly profit growth is expected to be 15% next quarter. If MSFT beats the street, 20% growth is possible. |
Earnings Table |
 Last qtr, Microsoft delivered 18% profit growth and beat estimates of 10%. Revenue increased 13%, year-on-year and beat estimates of 11%.
Annual Profit Estimates increased for 2025 and 2026 and slightly decreased for 2027. The 2028 estimate is $19.92. Qtrly Profit Estimates are for 15%, 8%, 15%, and 9% profit growth the next 4 qtrs. Management had previously stated its investing in more cloud infrastructure, and profit growth will eventually reaccelerate. Well now we have it. Analysts believe Microsoft’s revenue will grow 14% next quarter. |
Fair Value |
 My Fair Value P/E is 35. The stock has a P/E of 33 this quarter.
But MSFT is in its fiscal Q4, as it has a June Fiscal year-end. Thus I’m now looking ahead to next year, which has a $526 Fair Value, around 21% higher than the recent quote. MSFT had its fiscal year end on June 30th. |
Bottom Line |
 Microsoft (MSFT) was a stellar stock for much of the last decade, but was weak in 2021 when profit growth slowed, pushing the P/E down from 36 to 25 during a five-quarter period. Then the stock pushed higher as AI took center stage.
Last quarter was is a spend-to-grow period for Microsoft. I’m surprised profit growth accelerated so quickly considering the AI spending MSFT is making. MSFT moves up from 11th to 6th in the Conservative Stock Portfolio Power Rankings. The stock will be bought back for the Growth Portfolio tomorrow. The stock will rank 16th in the Power Rankings. |
Power Rankings |
Growth Stock Portfolio
15 of 32Aggressive Growth Portfolio N/AConservative Stock Portfolio 6 of 20 |
