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Microsoft
(NASDAQ:MSFT)
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Rating:82Outperform
Price Target:
$580.00
▲(16.00% Upside)
Action:Reiterated
Date:09/06/26
The score is driven mainly by Microsoft’s strong financial performance (high profitability and balance-sheet strength), supported by favorable technical momentum. Offsetting factors are premium valuation and near-term cash flow/margin pressure tied to elevated AI infrastructure investment, despite upbeat guidance and cloud/AI execution.
Positive Factors
Cloud and Azure Growth
Azure and Microsoft Cloud are expanding rapidly at substantial scale, demonstrating strong enterprise demand and continued migration toward cloud infrastructure and services. This growth supports recurring revenue, deepens customer integration, and provides a durable platform for monetizing AI, data, and productivity products.
Negative Factors
Heavy AI Capital Spending
Microsoft’s AI opportunity requires exceptionally high infrastructure investment, with capital spending rising faster than near-term free cash flow. This can reduce cash available for other uses, lengthen returns on invested capital, and increase execution risk if demand, pricing, or technology economics change.
Read all positive and negative factors
Positive Factors
Negative Factors
Cloud and Azure Growth
Azure and Microsoft Cloud are expanding rapidly at substantial scale, demonstrating strong enterprise demand and continued migration toward cloud infrastructure and services. This growth supports recurring revenue, deepens customer integration, and provides a durable platform for monetizing AI, data, and productivity products.
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
$3.71T
Dividend Yield0.73%
Average Volume (3M)31.77M
Price to Earnings (P/E)27.8
Beta (1Y)1.13
Revenue Growth17.79%
EPS Growth31.42%
CountryUS
Employees223,000
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)18.00
Shares Outstanding7,425,545,400
10 Day Avg. Volume22,010,282
30 Day Avg. Volume31,772,244
Financial Highlights & Ratios
PEG Ratio0.66
Price to Book (P/B)6.26
Price to Sales (P/S)8.35
P/FCF Ratio41.37
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
$571.41Price Target Upside14.28% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering33
EPS Forecast (FY)19.72
Revenue Forecast (FY)$390.64B
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:Jul 29, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Oct 27, 2026
Earnings Call Sentiment Positive
The call emphasized strong top-line and cloud momentum—record annual revenue, significant Azure and Microsoft Cloud growth, rapid customer adoption of AI products (Copilot, Foundry, Fabric), notable efficiency gains from internal models and silicon, and robust cash generation. The main negatives were declines in More Personal Computing (Windows/OEM and Xbox), substantial near-term capital spending and component price pressure, and margin mix effects from investing heavily in AI infrastructure. Overall, the strengths in cloud, AI platform and product monetization materially outweigh the operational and near-term cost/CapEx challenges.Positive Updates
Record Fiscal Year Revenue
Annual revenue surpassed $331 billion, up 18% year-over-year, with operating income increasing 21% to over $155 billion.
Negative Updates
More Personal Computing Decline
More Personal Computing revenue declined 4% (5% in constant currency) this quarter; Windows OEM and Devices revenue decreased 7%, and Windows OEM decreased 5% year-over-year due to lower PC demand and a strong prior-year comparable; Xbox revenue decreased 10% with Xbox operating income down 14%.
Read all updates
Q4-2026 Updates
Positive
Negative
Record Fiscal Year Revenue
Annual revenue surpassed $331 billion, up 18% year-over-year, with operating income increasing 21% to over $155 billion.
Read all positive updates
Company Guidance
Microsoft guided to another fiscal year of double‑digit revenue and operating‑income growth for FY'27, with operating expenses growing in the mid‑ to high‑single digits, full‑year operating margins down less than 1 point, an FY'27 effective tax rate of ~20%, and CapEx expected to grow year‑over‑year (company noted a lease/useful‑life change that shifts some spend from finance to operating leases and adjusts a related expectation to roughly $175 billion). For Q1 FY'27 the company forecast total revenue of $89.85–$90.95 billion (16–17% growth), COGS $29.6–$29.8 billion (23–24% growth), operating expense $16.8–$16.9 billion (7–8% growth), CapEx >$50 billion (including lease reclassification), and a Q1 effective tax rate of ~20% with operating margins roughly flat year‑over‑year; FX is expected to reduce revenue growth by less than 1 point (roughly 1 point for Productivity & Business Processes, <1 point for Intelligent Cloud, no meaningful impact to More Personal Computing). Segment guidance included Productivity & Business Processes revenue of $36.7–$37.0 billion (11–12% growth) with M365 Commercial cloud ~16% growth in constant currency (15% reported), M365 consumer mid‑teens, LinkedIn high single‑digits, Dynamics 365 low‑teens; Intelligent Cloud $40.95–$41.25 billion (33–34% growth) with Azure ~45% constant‑currency growth; More Personal Computing $12.2–$12.7 billion, Windows OEM & Devices down low‑20s, search ex‑TAC mid‑single digits, Xbox content & services down mid‑single digits, and hardware revenue down year‑over‑year.Microsoft Financial Statement Overview
Summary
Income Statement
92
Very Positive
Balance Sheet
86
Very Positive
Cash Flow
78
Positive
| Breakdown | Jun 2026 | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 331.84B | 281.72B | 245.12B | 211.91B | 198.27B |
| Gross Profit | 225.47B | 193.89B | 171.01B | 146.05B | 135.62B |
| EBITDA | 207.52B | 160.16B | 133.01B | 105.14B | 100.24B |
| Net Income | 133.75B | 101.83B | 88.14B | 72.36B | 72.74B |
Balance Sheet | |||||
| Total Assets | 758.38B | 619.00B | 512.16B | 411.98B | 364.84B |
| Cash, Cash Equivalents and Short-Term Investments | 76.84B | 94.56B | 75.53B | 111.26B | 104.75B |
| Total Debt | 128.81B | 112.18B | 97.85B | 79.44B | 78.40B |
| Total Liabilities | 315.99B | 275.52B | 243.69B | 205.75B | 198.30B |
| Stockholders Equity | 442.39B | 343.48B | 268.48B | 206.22B | 166.54B |
Cash Flow | |||||
| Free Cash Flow | 66.99B | 71.61B | 74.07B | 59.48B | 65.15B |
| Operating Cash Flow | 182.94B | 136.16B | 118.55B | 87.58B | 89.03B |
| Investing Cash Flow | -139.50B | -72.60B | -96.97B | -22.68B | -30.31B |
| Financing Cash Flow | -52.55B | -51.70B | -37.76B | -43.94B | -58.88B |
Microsoft Technical Analysis
Positive
499.99
Price Trends
443.56
Positive
427.03
Positive
429.37
Positive
Market Momentum
15.48
Positive
59.60
Neutral
57.09
Neutral
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 499.99 is above the 20-day moving average (MA) of 495.34, above the 50-day MA of 443.56, and above the 200-day MA of 429.37, indicating a bullish trend. The MACD of 15.48 indicates Positive momentum. The RSI at 59.60 is Neutral, neither overbought nor oversold. The STOCH value of 57.09 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MSFT.
Microsoft Risk Analysis
Microsoft disclosed 26 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 | $3.71T | 27.76 | 33.22% | 0.73% | 17.79% | 31.42% | |
78 Outperform | $29.82B | 100.95 | 4.26% | ― | 11.22% | 74.46% | |
77 Outperform | $18.40B | 12.22 | -395.76% | ― | 12.44% | 692.05% | |
76 Outperform | $218.20B | 6,053.98 | 1.29% | ― | 24.30% | ― | |
68 Neutral | $271.61B | 724.48 | 1.68% | ― | 24.49% | -68.55% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
58 Neutral | $457.36B | 26.74 | 50.59% | 1.26% | 17.35% | 32.98% |
* Technology Sector Average
MSFT
Microsoft
499.70
5.57
1.13%
ORCL
Oracle
158.78
-77.01
-32.66%
PANW
Palo Alto Networks
333.26
135.88
68.84%
NTNX
Nutanix
68.06
-6.92
-9.23%
OKTA
Okta
170.60
77.92
84.07%
CRWD
CrowdStrike Holdings
213.10
106.09
99.13%
Microsoft Corporate Events
Business Operations and StrategyFinancial Disclosures
Microsoft Restructures Reporting Around AI and Cloud Segments
Positive
Sep 2, 2026
On September 2, 2026, Microsoft announced that starting in fiscal year 2027 it would overhaul its financial reporting, moving from three segments to two: Agents and Infra, and Devices and Consumer. The new structure is intended to better mirror ho...
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.