Microsoft (MSFT) reported better-than-expected results for the fiscal first quarter, ended September 30, 2025. Earnings per share (EPS) of $4.13 climbed 23% year-over-year and easily topped consensus estimates of $3.67. Also, Q1 revenue totaled $77.7 billion, which was ahead of the $75.38 billion estimated by analysts. Overall sales were up 18% from a year earlier. Following the release, MSFT stock declined 3% in after-hours trading, possibly reflecting investor concerns over an Azure outage that occurred just hours before the report.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
During the quarter, Microsoft returned $10.7 billion to shareholders through dividends and buybacks, maintaining its capital deployment activities while investing in AI infrastructure.
CFO Amy Hood said the company exceeded expectations across revenue, operating income, and EPS, citing strong demand for Microsoft Cloud services.
Cloud and AI Lead the Charge
The standout performer in Q1 was Microsoft Cloud, which generated $49.1 billion in revenue, up 26%. Within this, Azure and other cloud services surged 40%, reflecting continued enterprise demand for scalable AI and data solutions. Also, Commercial remaining performance obligations (which provide visibility into future revenue) jumped 51% to $392 billion.
CEO Satya Nadella noted the company’s “planet-scale cloud and AI factory,” and Copilot integrations across productivity, security, and developer tools are driving real-world impact.
Further, revenue in Microsoft’s More Personal Computing segment rose 4% to $13.8 billion, with Windows OEM and Devices up 6%. Search and news advertising revenue grew 16%.
Is MSFT Stock a Buy?
Turning to Wall Street, MSFT stock has a Strong Buy consensus rating based on 33 Buys assigned in the last three months. At $629.43, the average Microsoft stock price target implies a 16.76% upside potential. It must be noted that analysts may update their price targets for MSFT stock after this earnings report.
