Microsoft’s Financial Landscape
Armed with a hefty market cap of $3.1 trillion, Redmond, Washington’s pride, Microsoft Corporation (MSFT), stands tall in the tech realm. Its domination of the PC software sphere, coupled with cloud solutions, productivity tools, and gaming consoles, makes it a juggernaut in both hardware and software domains. The fiscal Q1 earnings for 2025 are eagerly anticipated, scheduled for release on Tuesday, Oct. 22.
Projected Earnings Performance
Analysts foresee a profit of $3.08 per share for the tech giant, signaling a 3% growth from the year-ago quarter’s $2.99 per share. Impressively, Microsoft has consistently outshined Wall Street’s earnings estimates in the last four quarters. In Q4 of 2024, MSFT’s earnings per share reached $2.95, exceeding the consensus by 1.7%.
Future Outlook
For fiscal 2025, projections indicate an EPS of $13.04, marking a 10.5% surge from the $11.80 reported in fiscal 2024. Looking ahead to fiscal 2026, analysts expect a robust 15.2% year-over-year EPS growth to hit $15.02.
Performance Overview
In 2024, Microsoft registered a 10.5% rise, though trailing behind the S&P 500 Index’s impressive 19.7% gain and Technology Select Sector SPDR Fund’s 16% surge on a year-to-date basis.
Market Reaction and Fluctuations
Despite surpassing EPS estimates, Microsoft’s stock witnessed a slight dip of over 1% on Jul. 31 following disappointing cloud computing revenue of $28.5 billion. The underperformance of the cloud unit overshadowed the solid Q4 total revenue of $64.7 billion, raising apprehensions about Azure’s growth slowing from 31% to 29% in the prior quarter. Furthermore, Microsoft’s revenue guidance for the upcoming quarter fell short of analyst predictions, fostering increased investor doubt.
Ups and Downs
On Sep. 10, Microsoft’s stock surged, propelled by positive news on a new AI product, “Strawberry,” anticipated to be launched by its key partner, OpenAI. This development aligns with Microsoft’s endeavor to enrich its software offerings with cutting-edge AI capabilities.
Analyst Consensus and Market Sentiment
Analysts maintain a bullish stance on Microsoft stock, collectively endorsing a “Strong Buy” rating. Among 38 analysts scrutinizing the stock, 33 advocate a “Strong Buy,” three suggest a “Moderate Buy,” and the remaining two advise a “Hold.” This setup is marginally less bullish than three months ago, when 34 analysts proposed a “Strong Buy.” The average analyst price target for MSFT stands at $503.55, indicating a potential upside of 21.2% from current levels.
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