Microsoft (MSFT)
Market Price (5/2/2026): $413.24 | Market Cap: $3.1 TrilSector: Information Technology | Industry: Systems Software
Microsoft (MSFT)
Market Price (5/2/2026): $413.24Market Cap: $3.1 TrilSector: Information TechnologyIndustry: Systems Software
Investment Highlights Why It Matters Detailed financial logic regarding cash flow yields vs trend-riding momentum.
Attractive operating marginsOp Mgn LTMOperating Margin = Operating Income / Revenue Reflects profitability before taxes and before impact of capital structure (interest payments). is 47% Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 53%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 23%, CFO LTM is 170 Bil, FCF LTM is 73 Bil Stock buyback supportStock Buyback 3Y Total is 59 Bil Low stock price volatilityVol 12M is 25% Megatrend and thematic driversMegatrends include Artificial Intelligence, Cloud Computing, Cybersecurity, Digital Content & Streaming, Show more. | Weak multi-year price returns2Y Excs Rtn is -38%, 3Y Excs Rtn is -35% | Key risksMSFT key risks include [1] sophisticated cyberattacks targeting its vast software and cloud ecosystem, Show more. |
| Attractive operating marginsOp Mgn LTMOperating Margin = Operating Income / Revenue Reflects profitability before taxes and before impact of capital structure (interest payments). is 47% |
| Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 53%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 23%, CFO LTM is 170 Bil, FCF LTM is 73 Bil |
| Stock buyback supportStock Buyback 3Y Total is 59 Bil |
| Low stock price volatilityVol 12M is 25% |
| Megatrend and thematic driversMegatrends include Artificial Intelligence, Cloud Computing, Cybersecurity, Digital Content & Streaming, Show more. |
| Weak multi-year price returns2Y Excs Rtn is -38%, 3Y Excs Rtn is -35% |
| Key risksMSFT key risks include [1] sophisticated cyberattacks targeting its vast software and cloud ecosystem, Show more. |
Qualitative Assessment
AI Analysis | Feedback
Stock Movement Drivers
Fundamental Drivers
The -3.5% change in MSFT stock from 1/31/2026 to 5/1/2026 was primarily driven by a -8.1% change in the company's P/E Multiple.| (LTM values as of) | 1312026 | 5012026 | Change |
|---|---|---|---|
| Stock Price ($) | 429.31 | 414.44 | -3.5% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 305,453 | 318,273 | 4.2% |
| Net Income Margin (%) | 39.0% | 39.3% | 0.8% |
| P/E Multiple | 26.7 | 24.6 | -8.1% |
| Shares Outstanding (Mil) | 7,431 | 7,426 | 0.1% |
| Cumulative Contribution | -3.5% |
Market Drivers
1/31/2026 to 5/1/2026| Return | Correlation | |
|---|---|---|
| MSFT | -3.5% | |
| Market (SPY) | 3.6% | 60.4% |
| Sector (XLK) | 12.6% | 61.2% |
Fundamental Drivers
The -19.6% change in MSFT stock from 10/31/2025 to 5/1/2026 was primarily driven by a -32.7% change in the company's P/E Multiple.| (LTM values as of) | 10312025 | 5012026 | Change |
|---|---|---|---|
| Stock Price ($) | 515.67 | 414.44 | -19.6% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 293,812 | 318,273 | 8.3% |
| Net Income Margin (%) | 35.7% | 39.3% | 10.2% |
| P/E Multiple | 36.5 | 24.6 | -32.7% |
| Shares Outstanding (Mil) | 7,433 | 7,426 | 0.1% |
| Cumulative Contribution | -19.6% |
Market Drivers
10/31/2025 to 5/1/2026| Return | Correlation | |
|---|---|---|
| MSFT | -19.6% | |
| Market (SPY) | 5.5% | 45.4% |
| Sector (XLK) | 8.0% | 53.4% |
Fundamental Drivers
The 5.7% change in MSFT stock from 4/30/2025 to 5/1/2026 was primarily driven by a 17.9% change in the company's Total Revenues ($ Mil).| (LTM values as of) | 4302025 | 5012026 | Change |
|---|---|---|---|
| Stock Price ($) | 392.26 | 414.44 | 5.7% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 270,010 | 318,273 | 17.9% |
| Net Income Margin (%) | 35.8% | 39.3% | 9.9% |
| P/E Multiple | 30.2 | 24.6 | -18.5% |
| Shares Outstanding (Mil) | 7,434 | 7,426 | 0.1% |
| Cumulative Contribution | 5.7% |
Market Drivers
4/30/2025 to 5/1/2026| Return | Correlation | |
|---|---|---|
| MSFT | 5.7% | |
| Market (SPY) | 30.4% | 48.5% |
| Sector (XLK) | 55.1% | 53.9% |
Fundamental Drivers
The 38.1% change in MSFT stock from 4/30/2023 to 5/1/2026 was primarily driven by a 53.3% change in the company's Total Revenues ($ Mil).| (LTM values as of) | 4302023 | 5012026 | Change |
|---|---|---|---|
| Stock Price ($) | 300.15 | 414.44 | 38.1% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 207,591 | 318,273 | 53.3% |
| Net Income Margin (%) | 33.2% | 39.3% | 18.3% |
| P/E Multiple | 32.4 | 24.6 | -24.0% |
| Shares Outstanding (Mil) | 7,441 | 7,426 | 0.2% |
| Cumulative Contribution | 38.1% |
Market Drivers
4/30/2023 to 5/1/2026| Return | Correlation | |
|---|---|---|
| MSFT | 38.1% | |
| Market (SPY) | 78.7% | 64.9% |
| Sector (XLK) | 119.1% | 70.4% |
Price Returns Compared
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Total [1] | |
|---|---|---|---|---|---|---|---|
| Returns | |||||||
| MSFT Return | 52% | -28% | 58% | 13% | 16% | -15% | 92% |
| Peers Return | 31% | -34% | 64% | 40% | 16% | -2% | 124% |
| S&P 500 Return | 27% | -19% | 24% | 23% | 16% | 5% | 92% |
Monthly Win Rates [3] | |||||||
| MSFT Win Rate | 75% | 25% | 67% | 58% | 42% | 25% | |
| Peers Win Rate | 63% | 28% | 67% | 65% | 53% | 40% | |
| S&P 500 Win Rate | 75% | 42% | 67% | 75% | 67% | 50% | |
Max Drawdowns [4] | |||||||
| MSFT Max Drawdown | -5% | -36% | -7% | -2% | -16% | -26% | |
| Peers Max Drawdown | -7% | -40% | -1% | -9% | -27% | -21% | |
| S&P 500 Max Drawdown | -1% | -25% | -1% | -2% | -15% | -7% | |
[1] Cumulative total returns since the beginning of 2021
[2] Peers: GOOGL, AMZN, AAPL, ORCL, CRM. See MSFT Returns vs. Peers.
[3] Win Rate = % of calendar months in which monthly returns were positive
[4] Max drawdown represents maximum peak-to-trough decline within a year
[5] 2026 data is for the year up to 5/1/2026 (YTD)
How Low Can It Go
| Event | MSFT | S&P 500 |
|---|---|---|
| 2025 US Tariff Shock | ||
| % Loss | -14.3% | -18.8% |
| % Gain to Breakeven | 16.7% | 23.1% |
| Time to Breakeven | 23 days | 79 days |
| 2024 Yen Carry Trade Unwind | ||
| % Loss | -15.2% | -7.8% |
| % Gain to Breakeven | 18.0% | 8.5% |
| Time to Breakeven | 302 days | 18 days |
| Summer-Fall 2023 Five Percent Yield Shock | ||
| % Loss | -10.9% | -9.5% |
| % Gain to Breakeven | 12.2% | 10.5% |
| Time to Breakeven | 38 days | 24 days |
| 2022 Inflation Shock & Fed Tightening | ||
| % Loss | -32.2% | -24.5% |
| % Gain to Breakeven | 47.5% | 32.4% |
| Time to Breakeven | 227 days | 427 days |
| 2020 COVID-19 Crash | ||
| % Loss | -27.7% | -33.7% |
| % Gain to Breakeven | 38.3% | 50.9% |
| Time to Breakeven | 81 days | 140 days |
| Q4 2018 Fed Policy Error / Growth Scare | ||
| % Loss | -17.9% | -19.2% |
| % Gain to Breakeven | 21.8% | 23.7% |
| Time to Breakeven | 79 days | 105 days |
In The Past
Microsoft's stock fell -14.3% during the 2025 US Tariff Shock. Such a loss loss requires a 16.7% gain to breakeven.
Preserve Wealth
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Asset Allocation
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| Event | MSFT | S&P 500 |
|---|---|---|
| 2022 Inflation Shock & Fed Tightening | ||
| % Loss | -32.2% | -24.5% |
| % Gain to Breakeven | 47.5% | 32.4% |
| Time to Breakeven | 227 days | 427 days |
| 2020 COVID-19 Crash | ||
| % Loss | -27.7% | -33.7% |
| % Gain to Breakeven | 38.3% | 50.9% |
| Time to Breakeven | 81 days | 140 days |
| 2010 Eurozone Sovereign Debt Crisis / Flash Crash | ||
| % Loss | -25.7% | -15.4% |
| % Gain to Breakeven | 34.6% | 18.2% |
| Time to Breakeven | 581 days | 125 days |
| 2008-2009 Global Financial Crisis | ||
| % Loss | -57.6% | -53.4% |
| % Gain to Breakeven | 135.7% | 114.4% |
| Time to Breakeven | 1512 days | 1085 days |
In The Past
Microsoft's stock fell -14.3% during the 2025 US Tariff Shock. Such a loss loss requires a 16.7% gain to breakeven.
Preserve Wealth
Limiting losses and compounding gains is essential to preserving wealth.
Asset Allocation
Actively managed asset allocation strategies protect wealth. Learn more.
About Microsoft (MSFT)
AI Analysis | Feedback
- Imagine Amazon Web Services (AWS) for cloud computing, combined with the business software offerings of Google Workspace.
- Think of it as Apple, but with a much stronger focus on enterprise software and cloud services, and a major gaming console business like Sony PlayStation.
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- Microsoft Office Suite: A collection of productivity applications like Word, Excel, PowerPoint, Outlook, and communication tools such as Teams.
- Microsoft Dynamics 365: A suite of cloud-based business applications for enterprise resource planning (ERP) and customer relationship management (CRM).
- Microsoft Azure: A comprehensive cloud computing platform offering a wide range of services including computing, analytics, storage, and networking.
- Windows Operating System: The widely used operating system for personal computers, servers, and IoT devices.
- Xbox: A brand of gaming consoles, games, and online services.
- Surface Devices: A line of personal computers, tablets, and accessories designed and manufactured by Microsoft.
- LinkedIn: A professional networking platform and employment-oriented service.
- GitHub: A web-based platform for version control and collaboration on software development projects using Git.
- Microsoft Servers & Developer Tools: Software products like SQL Server, Windows Server, and Visual Studio for businesses and developers.
- Bing & Microsoft Advertising: A web search engine and its associated advertising services.
- Microsoft Consulting & Support Services: Professional services including technical support, consulting, training, and certification for Microsoft products.
AI Analysis | Feedback
Microsoft (MSFT) primarily sells its software, services, and solutions to **other companies and organizations** worldwide. While it also serves individual consumers with products like Xbox, Surface, and consumer versions of Windows and Office, the description heavily emphasizes its B2B offerings, including enterprise solutions, cloud platforms, server software, and developer tools. Given the global reach and diverse product portfolio of Microsoft, it serves millions of businesses across virtually all industries. While the background description does not list a comprehensive set of specific major customer companies by name for all its offerings, it does indicate key types of business customers and mentions several companies with whom it has collaborations or strategic relationships, which are highly likely to be significant customers of its enterprise products. Based on the information provided, major customers include: * **Original Equipment Manufacturers (OEMs)**: These companies license Windows and other Microsoft software for pre-installation on the PCs, tablets, and other devices they manufacture. Examples of major public OEMs include: * **HP Inc.** (HPQ) * **Dell Technologies Inc.** (DELL) * **Large Enterprises and Financial Institutions**: Companies that utilize Microsoft's extensive suite of enterprise software, cloud services (Azure), productivity tools (Office 365), and business solutions (Dynamics 365). Examples of public companies mentioned in the background with "collaborations" or "strategic relationships" that are highly likely to be major customers in this category include: * **Morgan Stanley** (MS) * **WPP plc** (WPP) * **Dynatrace, Inc.** (DT) * **ACI Worldwide, Inc.** (ACI)AI Analysis | Feedback
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Satya Nadella, Chairman and Chief Executive Officer
Satya Nadella has been the Chief Executive Officer of Microsoft since February 2014 and was named Chairman in 2021. Before becoming CEO, he held leadership roles in both enterprise and consumer businesses at Microsoft, most recently as the executive vice president of Microsoft's Cloud and Enterprise group, where he led the transformation to the cloud infrastructure and services business. Prior to joining Microsoft in 1992, Nadella was a member of the technology staff at Sun Microsystems. During his tenure as CEO, Microsoft has made significant acquisitions, including LinkedIn in 2016 for $26.2 billion and GitHub in 2018 for $7.5 billion.
Amy Hood, Executive Vice President and Chief Financial Officer
Amy Hood has served as the executive vice president and chief financial officer of Microsoft since 2013, making her the first woman to hold this role in the company's history. She joined Microsoft in 2002, holding various positions in the investor relations group and as chief of staff in the Server and Tools Business, and running the strategy and business development team in the Business division. Before joining Microsoft, Hood worked at Goldman Sachs in investment banking and capital markets groups. As CFO, she has overseen over 57 deals, including the $7.5 billion acquisition of GitHub in 2018, and played a strategic role in shifting funding towards cloud computing.
Brad Smith, Vice Chair and President
Brad Smith became Vice Chair of Microsoft in 2021 and President in 2015. He joined Microsoft in 1993, first leading the legal and corporate affairs team in Europe, and was named General Counsel in 2002. Before joining Microsoft, Smith was an associate and then partner at the law firm of Covington & Burling.
Judson Althoff, Chief Executive Officer of Commercial Business
Judson Althoff is the Chief Executive Officer of Microsoft's commercial business. He joined Microsoft in March 2013 as president of Microsoft North America and has been responsible for the sales strategy, execution, and revenue growth of the company's commercial business. Under his leadership, Microsoft has achieved uninterrupted commercial cloud revenue growth. Prior to joining Microsoft, Althoff spent multiple years in senior sales roles at Oracle and EMC.
Scott Guthrie, Executive Vice President, Cloud + AI Group
Scott Guthrie is the Executive Vice President of the Microsoft Cloud + AI Group, a role he has held since February 2014. He is responsible for the company's cloud computing fabric, artificial intelligence platform, and developer tools, including Microsoft Azure. Guthrie joined Microsoft in 1997 and has been a key contributor to many of Microsoft's core cloud, server, and development technologies, including being one of the original founders of the .NET project.
AI Analysis | Feedback
Microsoft (MSFT) faces several key risks, primarily stemming from the intense competition across its diverse business segments, increasing regulatory scrutiny, and the operational and cybersecurity challenges inherent in its expansive cloud and AI investments.
- Intense Competition and High-Stakes AI Investments: Microsoft operates in "brutally competitive markets" across its cloud computing, productivity software, gaming, and device segments, facing strong rivals such as Amazon, Google, Salesforce, and Sony. While the company is making significant investments in artificial intelligence (AI), this presents "major uncertainty" due to the "significant costs" associated with building and maintaining AI infrastructure, including data centers and specialized chips. There is a risk that these "soaring capital expenditures" could lead to "margin contraction" in its Intelligent Cloud segment if demand for AI-driven products does not meet expectations or if intense competition drives down pricing power. Furthermore, Microsoft's legacy segments, particularly in More Personal Computing, face potential "stagnation and decline".
- Regulatory and Antitrust Scrutiny: Microsoft's dominant position in several software and cloud markets has attracted "antitrust scrutiny" and regulatory investigations globally. Regulators in various jurisdictions, including Japan, the UK, the EU, and the US, are examining allegations of anti-competitive practices, such as software licensing models that may unfairly favor its Azure cloud platform over competitors, and product bundling strategies. The rapid expansion into AI also introduces new regulatory risks concerning data privacy, intellectual property, security, and potential biases, which could lead to increased compliance costs, delayed product launches, or limitations on AI functionalities.
- Cybersecurity Threats and Cloud Operational Risks: As a leading provider of cloud services and software, Microsoft is a prime target for "cybersecurity threats" and data privacy breaches. Any substantial "outage or security breach" in its cloud services, such as Azure, could disrupt critical services for numerous clients worldwide and trigger "cascading risks" throughout the deeply interconnected digital ecosystem. The continuous operation of its massive cloud infrastructure is also capital-intensive and vulnerable to disruptions if there are challenges in "access to advanced semiconductors, energy availability, environmental and zoning approvals, and specialized talent".
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Clear Emerging Threats to Microsoft (MSFT):
- Rise of Alternative Operating Systems: The increasing market penetration and adoption of operating systems like Google's Chrome OS, particularly in the education and budget-friendly PC markets, directly challenges Microsoft's dominance in Windows OEM licensing. Furthermore, Apple's macOS, especially with the performance advancements of Apple Silicon, continues to solidify its position as a compelling alternative to Windows for consumers and professionals, eroding Microsoft's market share in the premium PC segment. This trend poses a clear threat to Windows' foundational role and revenue.
- Proliferation of Best-of-Breed Specialized SaaS Solutions: While Microsoft offers comprehensive integrated suites (e.g., Office 365, Dynamics 365), there is an ongoing trend of enterprises adopting specialized, best-of-breed SaaS applications from various vendors for specific functions (e.g., Salesforce for CRM, Slack for communication, Zoom for video conferencing, Figma for design, Miro for collaboration). These specialized solutions often offer deeper features or more innovative user experiences within their niche, challenging the "all-in-one" appeal of Microsoft's offerings and potentially fragmenting its ecosystem. This can erode market share for individual components within Microsoft's productivity and business processes segments.
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Here are the addressable market sizes for Microsoft's main products and services:
- Cloud Computing (Azure): The global cloud computing market was estimated at USD 752.44 billion in 2024 and is projected to reach USD 2,390.18 billion by 2030, growing at a compound annual growth rate (CAGR) of 20.4% from 2025 to 2030. Another estimate valued the global cloud computing market at USD 736.10 billion in 2024, with an anticipated CAGR of 20.8% from 2025 to 2034. The global cloud computing market size was also reported as USD 781.27 billion in 2025, with projections to reach USD 2,904.52 billion by 2034. North America held a significant share, accounting for 39.0% of the global cloud computing market in 2024 and 52.0% in 2025.
-
Business Applications (Dynamics 365):
- **Customer Relationship Management (CRM):** The global CRM market was valued at USD 74 billion in 2023 and is forecasted to reach USD 135 billion in 2029. More recent estimates put the global CRM market size at USD 112.91 billion in 2025, expected to grow to USD 262.74 billion by 2032. North America led the CRM market, with an estimated valuation of USD 35.75 billion in 2025.
- **Enterprise Resource Planning (ERP):** The global ERP market size is estimated at USD 73 billion in 2025. Other reports state the global ERP software market size was USD 59.42 billion in 2025, projected to increase to USD 116.54 billion by 2035, or USD 77.08 billion in 2025, projected to reach USD 157.07 billion by 2033. North America's ERP software market size reached USD 18.58 billion in 2025.
- PC Operating Systems (Windows): Windows holds over 68% of the global operating system market across desktops, tablets, and consoles as of July 2024. For desktop systems, Windows commanded a 71.72% market share in March 2025 and an 80% market share as of February 2026. In December 2025, Windows accounted for 29.99% of the global operating system market across all platforms.
- Gaming (Xbox): The global gaming market is estimated to generate revenues of $187.7 billion in 2024 and was valued at USD 261.1 billion in 2025. Projections indicate the global gaming market size will reach USD 505.17 billion by 2030. The global games market is also expected to reach $188.8 billion in 2025. The global PC and console games market is projected to reach $103.7 billion by 2028.
- Search Advertising (Bing): The global online search advertising market size is projected to grow from $200 billion in 2023 to $350 billion by 2032. It was estimated at USD 500.55 billion in 2024. Search advertising spend globally is expected to reach $253.2 billion in 2025. The Search Advertising market reached USD 168.94 billion in 2024 and is projected to hit USD 499.08 billion by 2032. North America is the leading market, representing approximately 38% of the global spend.
- Productivity Software (Office, Microsoft Teams, etc.): null
- Professional Networking (LinkedIn): null
AI Analysis | Feedback
Microsoft (MSFT) is expected to drive future revenue growth over the next 2-3 years through several key areas:
-
Expansion and Monetization of Artificial Intelligence (AI) across Products and Services: Microsoft anticipates significant revenue growth from the increasing integration and monetization of AI capabilities, particularly through Microsoft 365 Copilot and new AI workloads on Azure. Microsoft 365 Copilot has seen a surge in paid seats and is expected to drive Average Revenue Per User (ARPU) growth. CEO Satya Nadella has emphasized the transformative potential of AI as a generational tech shift, and the company is focusing on efficiency and innovation in this area.
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Continued Strong Growth of Azure and the Intelligent Cloud Segment: Azure, Microsoft's cloud platform, remains a primary growth engine. The company expects sustained elevated Azure growth rates, driven by its core infrastructure business and the scaling of new cloud and AI workloads for its largest customers. Microsoft Cloud revenue has consistently grown, with commercial bookings surpassing $100 billion for the first time in fiscal 2025.
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Increased Adoption and Expansion of Microsoft 365 Commercial Offerings: Beyond Copilot, the broader Microsoft 365 Commercial segment is projected to grow through continued E5 adoption and an expanding installed base across all customer segments, including small and medium businesses and frontline workers. The company's core annuity sales motions and healthy renewals are also contributing factors.
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Growth in Windows OEM and Commercial Licensing driven by AI-enabled PCs: The "More Personal Computing" segment is expected to benefit from an improvement in Windows OEM licensing sales. The anticipated sale of hundreds of millions of AI-enabled laptops over the next few years is likely to drive demand for Windows licenses.
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Share Repurchases
- Microsoft's board authorized a new share repurchase program of up to $60 billion in September 2024, replacing a prior $60 billion authorization and having no expiration date.
- Annual share repurchases were approximately $18.42 billion in 2025, $17.254 billion in 2024, and $22.245 billion in 2023.
Share Issuance
- Microsoft's issuance of common stock averaged 1.892 billion shares for fiscal years ending June 2021 to 2025.
- The company's issuance of common stock peaked at 2.056 billion shares in June 2025.
- The latest twelve-month issuance of common stock was 2.042 billion shares.
Outbound Investments
- Microsoft acquired Activision Blizzard for $68.7 billion (totaling $75.4 billion after regulatory review) in October 2023, significantly enhancing its gaming operations.
- In 2021, Microsoft acquired Nuance Communications, aiming to advance its capabilities in conversational AI and speech recognition.
- Microsoft acquired Fungible for $190 million in January 2023, primarily to augment Azure's networking and storage services.
Capital Expenditures
- Microsoft's annual capital expenditures were $64.551 billion in 2025, $44.477 billion in 2024, and $28.107 billion in 2023.
- The capital expenditures for Q4 2025 amounted to $29.9 billion, showing an 89.04% increase from the prior quarter.
- These significant capital expenditures are primarily focused on enhancing Azure's data center efficiency and performance, notably supported by strategic acquisitions.
Latest Trefis Analyses
Trade Ideas
Select ideas related to MSFT.
| Date | Ticker | Company | Category | Trade Strategy | 6M Fwd Rtn | 12M Fwd Rtn | 12M Max DD |
|---|---|---|---|---|---|---|---|
| 04302026 | PLTR | Palantir Technologies | Monopoly | MY | Getting CheaperMonopoly-Like with P/S DeclineLarge cap with monopoly-like margins or cash flow generation and getting cheaper based on P/S multiple | 0.0% | 0.0% | 0.0% |
| 04102026 | ADSK | Autodesk | Dip Buy | DB | FCFY OPMDip Buy with High FCF Yield and High MarginBuying dips for companies with high FCF yield and meaningfully high operating margin | 8.5% | 8.5% | 0.0% |
| 04102026 | BSY | Bentley Systems | Dip Buy | DB | FCFY OPMDip Buy with High FCF Yield and High MarginBuying dips for companies with high FCF yield and meaningfully high operating margin | 4.2% | 4.2% | 0.0% |
| 04102026 | ENPH | Enphase Energy | Dip Buy | DB | P/E OPMDip Buy with Low PE and High MarginBuying dips for companies with tame PE and meaningfully high operating margin | 5.7% | 5.7% | 0.0% |
| 04102026 | BL | BlackLine | Dip Buy | DB | CFO/Rev | Low D/EDip Buy with High Cash Flow MarginsBuying dips for companies with significant cash flows from operations and reasonable debt / market cap | 3.2% | 3.2% | -3.0% |
| 03272026 | MSFT | Microsoft | Dip Buy | DB | P/E OPMDip Buy with Low PE and High MarginBuying dips for companies with tame PE and meaningfully high operating margin | 14.3% | 14.3% | 0.0% |
Research & Analysis
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Wealth Management
Peer Comparisons
| Peers to compare with: |
Financials
| Median | |
|---|---|
| Name | |
| Mkt Price | 274.20 |
| Mkt Cap | 2,979.8 |
| Rev LTM | 370,386 |
| Op Inc LTM | 111,776 |
| FCF LTM | 39,416 |
| FCF 3Y Avg | 45,410 |
| CFO LTM | 142,002 |
| CFO 3Y Avg | 120,297 |
Growth & Margins
| Median | |
|---|---|
| Name | |
| Rev Chg LTM | 14.5% |
| Rev Chg 3Y Avg | 11.2% |
| Rev Chg Q | 17.5% |
| QoQ Delta Rev Chg LTM | 4.4% |
| Op Inc Chg LTM | 17.0% |
| Op Inc Chg 3Y Avg | 22.5% |
| Op Mgn LTM | 32.3% |
| Op Mgn 3Y Avg | 31.3% |
| QoQ Delta Op Mgn LTM | 0.3% |
| CFO/Rev LTM | 36.4% |
| CFO/Rev 3Y Avg | 34.8% |
| FCF/Rev LTM | 19.1% |
| FCF/Rev 3Y Avg | 22.7% |
Valuation
| Median | |
|---|---|
| Name | |
| Mkt Cap | 2,979.8 |
| P/S | 8.6 |
| P/Op Inc | 26.6 |
| P/EBIT | 22.9 |
| P/E | 29.8 |
| P/CFO | 20.2 |
| Total Yield | 4.0% |
| Dividend Yield | 0.5% |
| FCF Yield 3Y Avg | 2.8% |
| D/E | 0.0 |
| Net D/E | 0.0 |
Returns
| Median | |
|---|---|
| Name | |
| 1M Rtn | 15.5% |
| 3M Rtn | 6.4% |
| 6M Rtn | -7.9% |
| 12M Rtn | 25.6% |
| 3Y Rtn | 78.2% |
| 1M Excs Rtn | 5.5% |
| 3M Excs Rtn | 2.2% |
| 6M Excs Rtn | -14.5% |
| 12M Excs Rtn | -2.0% |
| 3Y Excs Rtn | 3.5% |
Comparison Analyses
Segment Financials
Revenue by Segment| $ Mil | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| Productivity and Business Processes | 106,820 | 69,274 | 63,364 | 53,915 | 46,398 |
| Intelligent Cloud | 87,464 | 87,907 | 74,965 | 60,080 | 48,366 |
| More Personal Computing | 50,838 | 54,734 | 59,941 | 54,093 | 48,251 |
| Total | 245,122 | 211,915 | 198,270 | 168,088 | 143,015 |
| $ Mil | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| Productivity and Business Processes | 59,661 | 34,189 | 29,690 | 24,351 | 18,724 |
| Intelligent Cloud | 37,813 | 37,884 | 33,203 | 26,126 | 18,324 |
| More Personal Computing | 11,959 | 16,450 | 20,490 | 19,439 | 15,911 |
| Total | 109,433 | 88,523 | 83,383 | 69,916 | 52,959 |
Price Behavior
| Market Price | $414.44 | |
| Market Cap ($ Bil) | 3,077.6 | |
| First Trading Date | 03/13/1986 | |
| Distance from 52W High | -23.2% | |
| 50 Days | 200 Days | |
| DMA Price | $396.11 | $466.64 |
| DMA Trend | down | down |
| Distance from DMA | 4.6% | -11.2% |
| 3M | 1YR | |
| Volatility | 30.0% | 23.7% |
| Downside Capture | 1.06 | 0.68 |
| Upside Capture | 126.44 | 87.33 |
| Correlation (SPY) | 57.0% | 47.9% |
| 1M | 2M | 3M | 6M | 1Y | 3Y | |
|---|---|---|---|---|---|---|
| Beta | 1.16 | 0.97 | 1.18 | 1.00 | 0.96 | 1.00 |
| Up Beta | 0.56 | 0.60 | 0.76 | 0.72 | 0.77 | 0.96 |
| Down Beta | -2.72 | 0.42 | 0.14 | 0.64 | 0.82 | 0.89 |
| Up Capture | 161% | 135% | 131% | 82% | 93% | 110% |
| Bmk +ve Days | 15 | 22 | 31 | 66 | 141 | 428 |
| Stock +ve Days | 13 | 21 | 28 | 57 | 134 | 404 |
| Down Capture | 324% | 115% | 184% | 144% | 116% | 104% |
| Bmk -ve Days | 4 | 18 | 30 | 56 | 108 | 321 |
| Stock -ve Days | 9 | 22 | 36 | 68 | 118 | 349 |
[1] Upside and downside betas calculated using positive and negative benchmark daily returns respectively
Based On 1-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with MSFT | |
|---|---|---|---|---|
| MSFT | 5.7% | 24.8% | 0.18 | - |
| Sector ETF (XLK) | 55.3% | 20.5% | 2.04 | 53.9% |
| Equity (SPY) | 30.6% | 12.5% | 1.88 | 48.5% |
| Gold (GLD) | 39.5% | 27.2% | 1.20 | -2.5% |
| Commodities (DBC) | 51.5% | 17.9% | 2.20 | -2.9% |
| Real Estate (VNQ) | 13.1% | 13.5% | 0.67 | 2.2% |
| Bitcoin (BTCUSD) | -18.2% | 42.1% | -0.36 | 34.7% |
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Based On 5-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with MSFT | |
|---|---|---|---|---|
| MSFT | 10.6% | 26.4% | 0.38 | - |
| Sector ETF (XLK) | 18.6% | 24.8% | 0.67 | 79.8% |
| Equity (SPY) | 12.8% | 17.1% | 0.59 | 73.7% |
| Gold (GLD) | 20.5% | 17.9% | 0.94 | 5.7% |
| Commodities (DBC) | 14.3% | 19.1% | 0.61 | 9.5% |
| Real Estate (VNQ) | 3.5% | 18.8% | 0.09 | 39.2% |
| Bitcoin (BTCUSD) | 7.4% | 56.1% | 0.35 | 33.2% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Based On 10-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with MSFT | |
|---|---|---|---|---|
| MSFT | 24.7% | 26.9% | 0.85 | - |
| Sector ETF (XLK) | 23.6% | 24.4% | 0.88 | 85.4% |
| Equity (SPY) | 14.9% | 17.9% | 0.71 | 78.7% |
| Gold (GLD) | 13.6% | 15.9% | 0.71 | 4.2% |
| Commodities (DBC) | 9.7% | 17.7% | 0.46 | 20.0% |
| Real Estate (VNQ) | 5.7% | 20.7% | 0.24 | 47.4% |
| Bitcoin (BTCUSD) | 67.4% | 66.9% | 1.07 | 20.9% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Returns Analyses
Earnings Returns History
Expand for More| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| 4/29/2026 | -3.9% | ||
| 1/28/2026 | -10.0% | -14.0% | -18.3% |
| 10/29/2025 | -2.9% | -6.4% | -10.0% |
| 7/30/2025 | 3.9% | 2.3% | -0.5% |
| 4/30/2025 | 7.6% | 9.6% | 16.7% |
| 1/29/2025 | -6.2% | -6.6% | -10.1% |
| 10/30/2024 | -6.1% | -2.9% | -1.9% |
| 7/30/2024 | -1.1% | -5.5% | -2.7% |
| ... | |||
| SUMMARY STATS | |||
| # Positive | 10 | 11 | 12 |
| # Negative | 14 | 12 | 11 |
| Median Positive | 4.1% | 4.3% | 6.8% |
| Median Negative | -3.8% | -4.8% | -2.7% |
| Max Positive | 7.6% | 10.9% | 16.7% |
| Max Negative | -10.0% | -14.0% | -18.3% |
SEC Filings
Expand for More| Report Date | Filing Date | Filing |
|---|---|---|
| 03/31/2026 | 04/29/2026 | 10-Q |
| 12/31/2025 | 01/28/2026 | 10-Q |
| 09/30/2025 | 10/29/2025 | 10-Q |
| 06/30/2025 | 07/30/2025 | 10-K |
| 03/31/2025 | 04/30/2025 | 10-Q |
| 12/31/2024 | 01/29/2025 | 10-Q |
| 09/30/2024 | 10/30/2024 | 10-Q |
| 06/30/2024 | 07/30/2024 | 10-K |
| 03/31/2024 | 04/25/2024 | 10-Q |
| 12/31/2023 | 01/30/2024 | 10-Q |
| 09/30/2023 | 10/24/2023 | 10-Q |
| 06/30/2023 | 07/27/2023 | 10-K |
| 03/31/2023 | 04/25/2023 | 10-Q |
| 12/31/2022 | 01/24/2023 | 10-Q |
| 09/30/2022 | 10/25/2022 | 10-Q |
| 06/30/2022 | 07/28/2022 | 10-K |
Insider Activity
Expand for More| # | Owner | Title | Holding | Action | Filing Date | Price | Shares | Transacted Value | Value of Held Shares | Form |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Hogan, Kathleen T | EVP, Strategy | Direct | Sell | 3092026 | 409.52 | 12,321 | 5,045,643 | 56,486,362 | Form |
| 2 | Stanton, John W | Direct | Buy | 2182026 | 397.35 | 5,000 | 1,986,750 | 33,339,652 | Form | |
| 3 | Smith, Bradford L | Vice Chair and President | Direct | Sell | 12122025 | 438.82 | 3,812 | 1,672,781 | 198,169,556 | Form |
| 4 | Smith, Bradford L | Vice Chair and President | Direct | Sell | 12122025 | 390.57 | 30 | 11,717 | 177,870,321 | Form |
| 5 | Smith, Bradford L | Vice Chair and President | Direct | Buy | 12122025 | 377.46 | 3,842 | 1,450,221 | 171,912,193 | Form |
MSFT Trade Sentinel
OVERWEIGHT (Score 9-10)
CONVICTION RATIONALE
The probability-adjusted skew is exceptionally attractive at over 7.0x. This is driven by the 'WIDENING' competitive moat and an accelerating leading indicator (RPO), which assigns a high (70%) probability to the upside case. The downside is cushioned by strong underlying demand, making the risk/reward profile highly favorable.
STOCK ARCHETYPE
High-Beta CompounderDespite its mega-cap status, Microsoft's investment thesis is overwhelmingly driven by the hyper-growth Intelligent Cloud / AI segment. The stock's valuation and volatility are highly sensitive to the durability of this growth and the strength of its competitive moat, aligning it with the 'High-Beta Compounder' archetype.
INVESTMENT THESIS
The investment thesis is centered on Microsoft's unique ability to monetize generative AI by leveraging its two primary strategic assets: its exclusive cloud partnership with OpenAI and its massive, embedded enterprise distribution channel via Microsoft 365. This allows Microsoft to both capture new AI workloads in Azure and drive significant Average Revenue Per User (ARPU) uplift from its existing 450 million+ commercial seats.
- Azure revenue growth accelerated to +39% YoY in Q2 FY26, driven by a 157% increase in AI services.
- Commercial Remaining Performance Obligation (RPO) surged 110% YoY to $625B, indicating a massive pipeline of future revenue.
- The addressable market for the Copilot upsell is over 450 million commercial paid seats, representing a substantial, high-margin revenue opportunity.
PRIMARY RISK
The primary friction on the stock is the market's concern over the massive capital expenditures required to build out AI infrastructure ahead of fully realized revenue. A record $37.5B in Q2 FY26 CapEx, coupled with a slight deceleration in Azure growth, has created anxiety about diminishing returns on investment and potential near-term margin and free cash flow pressure.
- Capital expenditures increased 66% YoY to $37.5 billion in Q2 FY26.
- The stock price reacted negatively to the last earnings report despite beating estimates, highlighting market sensitivity to the CapEx/growth dynamic.
- Cloud gross margin percentage decreased to 67% due to the cost of AI infrastructure investments.
| KPI | Threshold | Rationale |
|---|---|---|
| Azure and Other Cloud Services Revenue Growth | Sustain >35% YoY | This is the primary growth engine. Any significant deceleration below this level would challenge the premium valuation and suggest the AI investment cycle is not yielding expected returns. |
| Quarterly Capital Expenditures | Guidance below $40B | The market is highly sensitive to the magnitude of AI spending. A signal that peak CapEx is near without a corresponding drop in growth would be a strong positive catalyst, assuaging fears of a prolonged cash burn. |
| Commercial RPO Growth (ex-OpenAI) | Sustain >25% YoY | This is the cleanest leading indicator of underlying, organic enterprise demand for Microsoft's cloud platform. Sustained strength here provides high visibility into future revenue growth and validates the long-term thesis. |
The AI Capex 'Arms Race': Visionary Investment or Margin Destroyer?
BULL VIEW
Demand is supply-constrained. The $625B RPO and 157% growth in AI services prove that every dollar spent on GPUs will be monetized, securing a decade of growth.
CORE TENSION
Bulls see massive AI capex as necessary to capture a generational opportunity, while bears fear diminishing returns, margin pressure, and that demand won't justify the $150B+ annual spend.
PREVAILING SENTIMENT
The market's negative reaction to Q2 FY26 earnings, where the stock plummeted despite a beat, highlights the intense focus on Azure's slight growth deceleration (39%) versus the 66% YoY surge in capital expenditures.
BEAR VIEW
Massive capex ($37.5B in Q2), slight Azure deceleration (40% to 39%), and high RPO concentration in OpenAI signals unsustainable, inefficient growth with significant execution risk.
| Timeline | Event & Metric To Watch |
|---|---|
Late April 2026 | FY26 Q3 Earnings Call Watch: Azure constant currency growth vs. forward CapEx guidance. The key is the ratio between the two. |
Next 3-6 Months | Regulatory Ruling (FTC/EU) Watch: Formal lawsuit or 'Statement of Objections' filed regarding the OpenAI partnership or Azure cloud practices. |
H1 2026 | AI Infrastructure Supply Chain Update Watch: Any explicit mention of 'GPU supply constraints' or 'capacity limitations' in earnings or supplier commentary (e.g., Nvidia). |
Ongoing through 2026 | Enterprise IT Spending Reports (e.g., Gartner) Watch: Downward revisions in 2026/2027 software budget growth or specific mentions of 'AI-driven headcount reduction'. |
| Date | Event | Stock Impact |
|---|---|---|
Aug 11, 2025 | C-Suite Stock Sale Details: CEO Satya Nadella filed to sell a portion of his holdings as part of a pre-arranged 10b5-1 trading plan, a recurring event noted in the company's risk factors. | Changed Little (-0.1%) $520.20 -> $519.94 |
Sep 12, 2025 | Annual Shareholder Letter Details: CEO Satya Nadella's annual letter to shareholders was released, reinforcing the company's long-term commitment to leading the AI platform shift and investing aggressively to capture the opportunity. | Modest 1.8% gain $500.07 -> $508.94 |
Oct 31, 2025 | Strategic Event: M365 Copilot Feature Expansion Details: Microsoft detailed new 'Agent Mode' capabilities and other enhancements for its Copilot AI assistant across the M365 suite, key to its AI monetization strategy. The market reaction was muted. | Slight -1.5% pullback $524.77 -> $516.84 |
Oct 29, 2025 | Q1 FY2026 Earnings & OpenAI Partnership Restructuring Details: Microsoft reported strong Q1 results with Azure growth at 40%. On the same day, news broke of a restructured partnership with OpenAI, giving OpenAI more flexibility. Stock fell the next day. | Fell notably by 2.9% $540.53 -> $524.77 |
Jan 28, 2026 | Q2 FY2026 Earnings Release Details: Despite beating revenue and EPS estimates, the stock dropped significantly. The market focused on a slight Azure growth deceleration to 39% and a 66% YoY increase in capital expenditures to $37.5 billion. | Plummeted 10.0% $481.63 -> $433.50 |
Feb 5, 2026 | Stifel Downgrade Details: Stifel downgraded MSFT to 'Hold' from 'Buy', citing concerns about optimistic 2027 expectations, rising AI-related capital expenditures, and potential cloud supply constraints. | Fell notably by 4.95% $414.19 -> $393.67 |
Position Sizing
1% - 3%
CONSERVATIVE
Stock is in a Moderate Volatility regime but with Spiking near-term fear. The Neutral sentiment, driven by the unresolved debate on AI Capex ROI and high valuation, reduces conviction despite high revenue visibility. We cap exposure to Conservative (1-3%) until the profitability of AI investments becomes clearer.
Diversification Alternatives
ANET
SECTORArista Networks is a 'picks and shovels' play on AI, benefiting from massive data center buildouts (including MSFT's) without the risk of monetizing the AI models themselves.
DDOG
INDUSTRYDatadog benefits from the growth and complexity of cloud platforms like Azure as a key monitoring provider, but its capital-light model avoids the capex arms race risk facing Microsoft.
Microsoft is transitioning from a diversified software and hardware seller into a concentrated AI platform company, where massive capital expenditures in data centers are a leading indicator of future high-margin revenue from Azure and Copilot services.
Filter all news through the lens of AI monetization and Azure's competitive position against AWS and Google Cloud.
Azure revenue growth accelerating or holding above 35% YoY. Microsoft 365 Copilot paid seat additions accelerating sequentially (current >20M). Evidence of enterprise customers consolidating spend on the Microsoft platform for AI workloads.
Azure revenue growth decelerating below 30%. Evidence of customers choosing alternative AI platforms (e.g., Google's Gemini, Anthropic) for major new workloads. Regulatory action targeting Microsoft's bundling of Copilot with M365 or its Azure market position.
Quarterly fluctuations in Windows OEM or Surface revenue. Short-term stock price reactions to capital expenditure announcements. Minor updates to the OpenAI partnership agreement.
Repricing Catalyst
The market is repricing Microsoft based on its ability to convert $190B in planned calendar 2026 capital expenditures into high-margin, recurring AI revenue. The key metric is the growth of its AI business, which surpassed a $37 billion annual run rate in Q3 FY26 (+123% YoY), driven by Azure AI services and the adoption of products like Microsoft 365 Copilot.
Cloud Infrastructure & Services (Azure)
$138.8B TTM (42% of Total) · 40% MarginWhat It Is
Azure cloud platform: compute, storage, networking, databases, and AI services (including Azure OpenAI Service). Server products like Windows Server and SQL Server.
Who Pays & How
Enterprises pay for cloud computing resources on a consumption basis to build, deploy, and manage applications. The primary driver is the shift from on-premise data centers to the cloud and the need for scalable infrastructure for AI workloads. High switching costs are created by deep integration with enterprise IT and data gravity.
Competition
Productivity & Business Software (Office, LinkedIn, Dynamics)
$140.0B TTM (42% of Total) · 60% MarginWhat It Is
Microsoft 365 (Office suite, Teams, Exchange), Dynamics 365 (ERP/CRM), LinkedIn (Professional Network).
Who Pays & How
Enterprises and consumers pay recurring subscription fees for access to productivity and business process software. The primary 'why' is the deep entrenchment of Office file formats and Teams collaboration in corporate workflows, creating extremely high switching costs.
Competition
Personal Computing & Devices (Windows, Xbox, Surface)
$52.8B TTM (16% of Total) · 35% MarginWhat It Is
Windows operating system licenses, Surface hardware (laptops, tablets), Xbox consoles, and Gaming content/services (including Activision Blizzard).
Who Pays & How
PC OEMs (Dell, HP, Lenovo) pay license fees to pre-install Windows. Consumers pay for hardware (Surface, Xbox) and recurring gaming subscriptions (Game Pass). The 'why' for Windows is its status as the default operating system for business and personal computing.
Competition
External Quote Links
| Y Finance | Barrons |
| TradingView | Morningstar |
| SeekingAlpha | ValueLine |
| Motley Fool | Robinhood |
| CNBC | Etrade |
| MarketWatch | Unusual Whales |
| YCharts | Perplexity Finance |
| FinViz |
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