Microsoft (MSFT)
Market Price (7/23/2026): $388.26 | Market Cap: $2.9 TrilInvestor Relations Sector: Information Technology | Industry: Systems Software
Microsoft (MSFT)
Market Price (7/23/2026): $388.26Market Cap: $2.9 TrilSector: Information TechnologyIndustry: Systems Software
Investment Highlights Why It Matters Detailed financial logic regarding cash flow yields vs trend-riding momentum.
Attractive yieldTotal YieldTotal Yield = Earnings Yield + Dividend Yield, Earnings Yield = Net Income / Market Cap Dividend Yield = Total Dividends / Market Cap is 5.2% 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 28% Megatrend and thematic driversMegatrends include Artificial Intelligence, Cloud Computing, Cybersecurity, Digital Content & Streaming, Show more. | Weak multi-year price returns2Y Excs Rtn is -45%, 3Y Excs Rtn is -50% | Key risksMSFT key risks include [1] sophisticated cyberattacks targeting its vast software and cloud ecosystem, Show more. |
| Attractive yieldTotal YieldTotal Yield = Earnings Yield + Dividend Yield, Earnings Yield = Net Income / Market Cap Dividend Yield = Total Dividends / Market Cap is 5.2% |
| 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 28% |
| Megatrend and thematic driversMegatrends include Artificial Intelligence, Cloud Computing, Cybersecurity, Digital Content & Streaming, Show more. |
| Weak multi-year price returns2Y Excs Rtn is -45%, 3Y Excs Rtn is -50% |
| Key risksMSFT key risks include [1] sophisticated cyberattacks targeting its vast software and cloud ecosystem, Show more. |
Qualitative Assessment
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Microsoft (MSFT) stock has gained about 5% since 3/31/2026 because of the following key factors:
1. Microsoft exceeded fiscal Q3 2026 earnings expectations and provided optimistic fiscal Q4 2026 guidance.
Microsoft reported its fiscal Q3 2026 earnings on April 29, 2026, with diluted earnings per share (EPS) of $4.27, surpassing analysts' consensus estimates of $4.06. Quarterly revenue reached $82.9 billion, an 18% year-over-year increase, beating the $81.4 billion consensus estimate. For fiscal Q4 2026, the company projected revenue between $86.7 billion and $87.8 billion.
2. The Intelligent Cloud segment, particularly Azure, continued its robust growth trajectory, fueled by significant AI investments.
Microsoft's Intelligent Cloud revenue surged 30% to $34.7 billion in fiscal Q3 2026, with Azure and other cloud services growing 40% (39% in constant currency). The company also highlighted that its AI business achieved an annual revenue run rate exceeding $37 billion, marking a 123% increase year-over-year. For fiscal Q4 2026, Azure's growth was guided to be between 39% and 40% in constant currency, beating analyst expectations. This strong cloud performance and future outlook, driven by substantial investments in AI infrastructure, provided a significant boost to investor confidence.
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Microsoft (MSFT) stock has gained about 5% since 3/31/2026 because of the following key factors:
1. Microsoft exceeded fiscal Q3 2026 earnings expectations and provided optimistic fiscal Q4 2026 guidance.
Microsoft reported its fiscal Q3 2026 earnings on April 29, 2026, with diluted earnings per share (EPS) of $4.27, surpassing analysts' consensus estimates of $4.06. Quarterly revenue reached $82.9 billion, an 18% year-over-year increase, beating the $81.4 billion consensus estimate. For fiscal Q4 2026, the company projected revenue between $86.7 billion and $87.8 billion.
2. The Intelligent Cloud segment, particularly Azure, continued its robust growth trajectory, fueled by significant AI investments.
Microsoft's Intelligent Cloud revenue surged 30% to $34.7 billion in fiscal Q3 2026, with Azure and other cloud services growing 40% (39% in constant currency). The company also highlighted that its AI business achieved an annual revenue run rate exceeding $37 billion, marking a 123% increase year-over-year. For fiscal Q4 2026, Azure's growth was guided to be between 39% and 40% in constant currency, beating analyst expectations. This strong cloud performance and future outlook, driven by substantial investments in AI infrastructure, provided a significant boost to investor confidence.
3. Microsoft Build 2026 showcased strategic advancements and leadership in artificial intelligence.
At its annual Build 2026 conference in early June, Microsoft unveiled a series of AI-focused initiatives, emphasizing "agentic AI" as the next major computing platform. Key announcements included the introduction of seven proprietary AI models aimed at reducing reliance on external partners. The company also detailed efforts to evolve Windows into an AI-native operating system and launched "Microsoft Scout," a new category of "Autopilot" AI agent designed to operate autonomously across various applications. These developments underscored Microsoft's commitment to and innovation in the rapidly expanding AI market.
4. Analyst sentiment remained overwhelmingly positive with high price targets.
Throughout the period, a strong consensus of "Strong Buy" or "Buy" ratings from numerous financial analysts underscored investor confidence in Microsoft. Analysts maintained an average 12-month price target ranging from $552.27 to $562.10, indicating significant potential upside from current levels. Many analysts considered the stock's valuation, trading at approximately 21x to 22x next-twelve-months earnings, as its cheapest forward multiple since 2023, presenting a rare buying opportunity.
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Stock Movement Drivers
Fundamental Drivers
The 5.7% change in MSFT stock from 3/31/2026 to 7/22/2026 was primarily driven by a 4.2% change in the company's Total Revenues ($ Mil).| (LTM values as of) | 3312026 | 7222026 | Change |
|---|---|---|---|
| Stock Price ($) | 369.37 | 390.34 | 5.7% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 305,453 | 318,273 | 4.2% |
| Net Income Margin (%) | 39.0% | 39.3% | 0.8% |
| P/E Multiple | 23.0 | 23.1 | 0.6% |
| Shares Outstanding (Mil) | 7,431 | 7,426 | 0.1% |
| Cumulative Contribution | 5.7% |
Market Drivers
3/31/2026 to 7/22/2026| Return | Correlation | |
|---|---|---|
| MSFT | 5.7% | |
| Market (SPY) | 14.9% | 16.6% |
| Sector (XLK) | 35.6% | 9.6% |
Fundamental Drivers
The -18.9% change in MSFT stock from 12/31/2025 to 7/22/2026 was primarily driven by a -32.1% change in the company's P/E Multiple.| (LTM values as of) | 12312025 | 7222026 | Change |
|---|---|---|---|
| Stock Price ($) | 481.48 | 390.34 | -18.9% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 293,812 | 318,273 | 8.3% |
| Net Income Margin (%) | 35.7% | 39.3% | 10.2% |
| P/E Multiple | 34.1 | 23.1 | -32.1% |
| Shares Outstanding (Mil) | 7,433 | 7,426 | 0.1% |
| Cumulative Contribution | -18.9% |
Market Drivers
12/31/2025 to 7/22/2026| Return | Correlation | |
|---|---|---|
| MSFT | -18.9% | |
| Market (SPY) | 9.9% | 30.3% |
| Sector (XLK) | 25.4% | 26.9% |
Fundamental Drivers
The -20.9% change in MSFT stock from 6/30/2025 to 7/22/2026 was primarily driven by a -39.0% change in the company's P/E Multiple.| (LTM values as of) | 6302025 | 7222026 | Change |
|---|---|---|---|
| Stock Price ($) | 493.47 | 390.34 | -20.9% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 270,010 | 318,273 | 17.9% |
| Net Income Margin (%) | 35.8% | 39.3% | 9.9% |
| P/E Multiple | 38.0 | 23.1 | -39.0% |
| Shares Outstanding (Mil) | 7,434 | 7,426 | 0.1% |
| Cumulative Contribution | -20.9% |
Market Drivers
6/30/2025 to 7/22/2026| Return | Correlation | |
|---|---|---|
| MSFT | -20.9% | |
| Market (SPY) | 22.0% | 34.9% |
| Sector (XLK) | 43.0% | 32.6% |
Fundamental Drivers
The 17.3% change in MSFT stock from 6/30/2023 to 7/22/2026 was primarily driven by a 53.3% change in the company's Total Revenues ($ Mil).| (LTM values as of) | 6302023 | 7222026 | Change |
|---|---|---|---|
| Stock Price ($) | 332.67 | 390.34 | 17.3% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 207,591 | 318,273 | 53.3% |
| Net Income Margin (%) | 33.2% | 39.3% | 18.3% |
| P/E Multiple | 35.9 | 23.1 | -35.5% |
| Shares Outstanding (Mil) | 7,441 | 7,426 | 0.2% |
| Cumulative Contribution | 17.3% |
Market Drivers
6/30/2023 to 7/22/2026| Return | Correlation | |
|---|---|---|
| MSFT | 17.3% | |
| Market (SPY) | 74.6% | 58.6% |
| Sector (XLK) | 111.3% | 59.7% |
Price Returns Compared
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Total [1] | |
|---|---|---|---|---|---|---|---|
| Returns | |||||||
| MSFT Return | 52% | -28% | 58% | 13% | 16% | -17% | 87% |
| Peers Return | 31% | -34% | 64% | 40% | 16% | -6% | 116% |
| S&P 500 Return | 27% | -19% | 24% | 23% | 16% | 10% | 100% |
Monthly Win Rates [3] | |||||||
| MSFT Win Rate | 75% | 25% | 67% | 58% | 42% | 43% | |
| Peers Win Rate | 63% | 28% | 67% | 65% | 53% | 43% | |
| S&P 500 Win Rate | 75% | 42% | 67% | 75% | 67% | 57% | |
Max Drawdowns [4] | |||||||
| MSFT Max Drawdown | -9% | -36% | -13% | -15% | -21% | -27% | |
| Peers Max Drawdown | -15% | -41% | -18% | -20% | -35% | -29% | |
| S&P 500 Max Drawdown | -5% | -25% | -10% | -8% | -19% | -9% | |
[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 7/22/2026 (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% | 23.8% |
| 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.
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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)
Microsoft Corporation is a global technology leader that develops, licenses, and supports a comprehensive portfolio of software, services, devices, and solutions. The company serves a vast and diverse customer base, ranging from individual consumers and developers to small businesses, large enterprises, and government organizations worldwide. Its operations are broadly structured around enhancing productivity, providing intelligent cloud infrastructure, and powering personal computing experiences.
The company's core offerings include its ubiquitous Office suite (Word, Excel, PowerPoint), collaborative platforms like Microsoft Teams and LinkedIn, and business management software such as Dynamics 365, all aimed at boosting productivity and streamlining business processes. For developers and enterprises, Microsoft provides its powerful Azure cloud computing platform, robust server products like Windows Server and SQL Server, and GitHub, a leading platform for software development and collaboration.
In the realm of personal computing, Microsoft is responsible for the widely adopted Windows operating system, its line of Surface PCs and tablets, and the popular Xbox gaming consoles and services. Additionally, it operates search and advertising services like Bing. Through these diverse and interconnected offerings, Microsoft empowers individuals and organizations globally with essential technology infrastructure, innovative tools, and engaging consumer products.
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- 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.
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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.
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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
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Microsoft (MSFT) is expected to drive future revenue growth over the next 2-3 years through several key areas:
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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.
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Peer Comparisons
| Peers to compare with: |
Financials
| Median | |
|---|---|
| Name | |
| Mkt Price | 285.37 |
| Mkt Cap | 2,764.5 |
| Rev LTM | 370,386 |
| Op Inc LTM | 111,776 |
| FCF LTM | 39,545 |
| FCF 3Y Avg | 45,410 |
| CFO LTM | 144,376 |
| CFO 3Y Avg | 120,320 |
Growth & Margins
| Median | |
|---|---|
| Name | |
| Rev Chg LTM | 15.8% |
| Rev Chg 3Y Avg | 11.4% |
| Rev Chg Q | 17.5% |
| QoQ Delta Rev Chg LTM | 3.9% |
| Op Inc Chg LTM | 18.7% |
| Op Inc Chg 3Y Avg | 22.5% |
| Op Mgn LTM | 32.7% |
| Op Mgn 3Y Avg | 31.6% |
| QoQ Delta Op Mgn LTM | 0.4% |
| CFO/Rev LTM | 38.4% |
| CFO/Rev 3Y Avg | 35.9% |
| FCF/Rev LTM | 19.1% |
| FCF/Rev 3Y Avg | 22.7% |
Valuation
| Median | |
|---|---|
| Name | |
| Mkt Cap | 2,764.5 |
| P/S | 7.2 |
| P/Op Inc | 24.7 |
| P/EBIT | 19.8 |
| P/E | 24.5 |
| P/CFO | 17.4 |
| Total Yield | 4.7% |
| Dividend Yield | 0.6% |
| FCF Yield 3Y Avg | 2.4% |
| D/E | 0.1 |
| Net D/E | 0.0 |
Returns
| Median | |
|---|---|
| Name | |
| 1M Rtn | 5.7% |
| 3M Rtn | -6.9% |
| 6M Rtn | -3.7% |
| 12M Rtn | -7.2% |
| 3Y Rtn | 44.2% |
| 1M Excs Rtn | 5.4% |
| 3M Excs Rtn | -11.1% |
| 6M Excs Rtn | -14.2% |
| 12M Excs Rtn | -27.0% |
| 3Y Excs Rtn | -22.8% |
Comparison Analyses
Segment Financials
Revenue by Segment| $ Mil | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| Productivity and Business Processes | 120,810 | 106,820 | 69,274 | 63,364 | 53,915 |
| Intelligent Cloud | 106,265 | 87,464 | 87,907 | 74,965 | 60,080 |
| More Personal Computing | 54,649 | 50,838 | 54,734 | 59,941 | 54,093 |
| Total | 281,724 | 245,122 | 211,915 | 198,270 | 168,088 |
| $ Mil | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| Productivity and Business Processes | 69,773 | 59,661 | 34,189 | 29,690 | 24,351 |
| Intelligent Cloud | 44,589 | 37,813 | 37,884 | 33,203 | 26,126 |
| More Personal Computing | 14,166 | 11,959 | 16,450 | 20,490 | 19,439 |
| Total | 128,528 | 109,433 | 88,523 | 83,383 | 69,916 |
Price Behavior
| Market Price | $390.34 | |
| Market Cap ($ Bil) | 2,898.7 | |
| First Trading Date | 03/13/1986 | |
| Distance from 52W High | -27.5% | |
| 50 Days | 200 Days | |
| DMA Price | $400.18 | $436.09 |
| DMA Trend | down | down |
| Distance from DMA | -2.5% | -10.5% |
| 3M | 1YR | |
| Volatility | 34.2% | 27.6% |
| Downside Capture | 63.76 | 115.51 |
| Upside Capture | 2.94 | 61.46 |
| Correlation (SPY) | 10.9% | 34.5% |
| 1M | 2M | 3M | 6M | 1Y | 3Y | |
|---|---|---|---|---|---|---|
| Beta | 0.43 | 0.40 | 0.61 | 0.80 | 0.80 | 0.95 |
| Up Beta | 0.91 | 0.17 | 0.51 | 0.46 | 0.56 | 0.92 |
| Down Beta | 0.01 | 0.13 | -0.01 | 0.26 | 0.64 | 0.87 |
| Up Capture | -65% | 17% | 62% | 66% | 55% | 81% |
| Bmk +ve Days | 11 | 24 | 40 | 67 | 140 | 429 |
| Stock +ve Days | 8 | 17 | 30 | 55 | 121 | 398 |
| Down Capture | 133% | 94% | 112% | 142% | 118% | 103% |
| Bmk -ve Days | 10 | 17 | 23 | 58 | 112 | 321 |
| Stock -ve Days | 13 | 24 | 33 | 70 | 131 | 353 |
[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 | -22.9% | 27.5% | -0.96 | - |
| Sector ETF (XLK) | 38.8% | 24.7% | 1.27 | 32.2% |
| Equity (SPY) | 20.0% | 12.6% | 1.16 | 34.7% |
| Gold (GLD) | 21.2% | 28.1% | 0.67 | 7.5% |
| Commodities (DBC) | 33.0% | 19.1% | 1.36 | -3.2% |
| Real Estate (VNQ) | 13.9% | 14.0% | 0.70 | -0.5% |
| Bitcoin (BTCUSD) | -43.6% | 42.9% | -1.21 | 31.4% |
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Based On 5-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with MSFT | |
|---|---|---|---|---|
| MSFT | 7.6% | 27.0% | 0.27 | - |
| Sector ETF (XLK) | 19.6% | 25.6% | 0.68 | 73.6% |
| Equity (SPY) | 12.8% | 17.1% | 0.58 | 70.4% |
| Gold (GLD) | 17.3% | 18.4% | 0.76 | 6.4% |
| Commodities (DBC) | 9.3% | 19.5% | 0.37 | 8.7% |
| Real Estate (VNQ) | 2.7% | 18.9% | 0.04 | 37.4% |
| Bitcoin (BTCUSD) | 15.2% | 53.5% | 0.46 | 33.4% |
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Based On 10-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with MSFT | |
|---|---|---|---|---|
| MSFT | 23.6% | 27.2% | 0.81 | - |
| Sector ETF (XLK) | 24.5% | 24.8% | 0.89 | 82.1% |
| Equity (SPY) | 15.1% | 17.9% | 0.72 | 76.9% |
| Gold (GLD) | 11.5% | 16.1% | 0.58 | 6.1% |
| Commodities (DBC) | 7.1% | 17.9% | 0.31 | 19.0% |
| Real Estate (VNQ) | 5.0% | 20.7% | 0.20 | 46.5% |
| Bitcoin (BTCUSD) | 58.5% | 66.2% | 0.99 | 21.5% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Returns Analyses
Earnings Returns History
Updated 6/2/2026| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| 4/29/2026 | -3.9% | -2.5% | 6.3% |
| 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 | 13 |
| # Negative | 14 | 13 | 11 |
| Median Positive | 4.1% | 4.3% | 6.3% |
| Median Negative | -3.8% | -4.2% | -2.7% |
| Max Positive | 7.6% | 10.9% | 16.7% |
| Max Negative | -10.0% | -14.0% | -18.3% |
| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| 4/29/2026 | -3.9% | -2.5% | 6.3% |
| 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% |
| 4/25/2024 | 1.8% | -0.3% | 8.0% |
| 1/30/2024 | -2.7% | -0.8% | 1.4% |
| 10/24/2023 | 3.1% | 2.3% | 14.5% |
| 7/25/2023 | -3.8% | -4.2% | -6.6% |
| 4/25/2023 | 7.2% | 10.9% | 14.2% |
| 1/24/2023 | -0.6% | 2.4% | 5.5% |
| 10/25/2022 | -7.7% | -9.0% | -1.0% |
| 7/26/2022 | 6.7% | 9.1% | 9.7% |
| 4/26/2022 | 4.8% | 4.3% | -2.6% |
| 1/25/2022 | 2.8% | 7.0% | 2.3% |
| 10/26/2021 | 4.2% | 7.4% | 9.2% |
| 7/27/2021 | -0.1% | 0.2% | 5.6% |
| 4/27/2021 | -2.8% | -5.4% | -3.8% |
| 1/26/2021 | 0.2% | 3.1% | -1.2% |
| 10/27/2020 | -5.0% | -3.2% | 0.6% |
| 7/22/2020 | -4.3% | -3.6% | 1.6% |
| SUMMARY STATS | |||
| # Positive | 10 | 11 | 13 |
| # Negative | 14 | 13 | 11 |
| Median Positive | 4.1% | 4.3% | 6.3% |
| Median Negative | -3.8% | -4.2% | -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 |
| 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 |
| 03/31/2022 | 04/26/2022 | 10-Q |
| 12/31/2021 | 01/25/2022 | 10-Q |
| 09/30/2021 | 10/26/2021 | 10-Q |
| 06/30/2021 | 07/29/2021 | 10-K |
| 03/31/2021 | 04/27/2021 | 10-Q |
| 12/31/2020 | 01/26/2021 | 10-Q |
| 09/30/2020 | 10/27/2020 | 10-Q |
| 06/30/2020 | 07/31/2020 | 10-K |
| 03/31/2020 | 04/29/2020 | 10-Q |
| 12/31/2019 | 01/29/2020 | 10-Q |
| 09/30/2019 | 10/23/2019 | 10-Q |
| 06/30/2019 | 08/01/2019 | 10-K |
Insider Activity
Updated 7/15/2026| # | Owner | Title | Holding | Action | Filing Date | Price | Shares | Transacted Value | Value of Held Shares | Form |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Numoto, Takeshi | EVP, Chief Marketing Officer | Direct | Sell | 6122026 | 402.84 | 4,500 | 1,812,780 | 19,121,912 | Form |
| 2 | Numoto, Takeshi | EVP, Chief Marketing Officer | Direct | Sell | 6102026 | 412.45 | 2,500 | 1,031,125 | 21,434,102 | Form |
| 3 | Althoff, Judson | CEO Microsoft Commercial | Direct | Sell | 6022026 | 460.99 | 15,500 | 7,145,314 | 50,928,771 | Form |
| 4 | Coleman, Amy | EVP, Chief Human Resources Off | Direct | Sell | 5182026 | 411.34 | 1,262 | 519,242 | 18,923,122 | Form |
| 5 | Hogan, Kathleen T | EVP, Strategy | Direct | Sell | 3092026 | 409.52 | 12,321 | 5,045,643 | 56,486,362 | Form |
| # | Owner | Title | Holding | Action | Filing Date | Price | Shares | Transacted Value | Value of Held Shares | Form |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Numoto, Takeshi | EVP, Chief Marketing Officer | Direct | Sell | 6122026 | 402.84 | 4,500 | 1,812,780 | 19,121,912 | Form |
| 2 | Numoto, Takeshi | EVP, Chief Marketing Officer | Direct | Sell | 6102026 | 412.45 | 2,500 | 1,031,125 | 21,434,102 | Form |
| 3 | Althoff, Judson | CEO Microsoft Commercial | Direct | Sell | 6022026 | 460.99 | 15,500 | 7,145,314 | 50,928,771 | Form |
| 4 | Coleman, Amy | EVP, Chief Human Resources Off | Direct | Sell | 5182026 | 411.34 | 1,262 | 519,242 | 18,923,122 | Form |
| 5 | Hogan, Kathleen T | EVP, Strategy | Direct | Sell | 3092026 | 409.52 | 12,321 | 5,045,643 | 56,486,362 | Form |
| 6 | Stanton, John W | Direct | Buy | 2182026 | 397.35 | 5,000 | 1,986,750 | 33,339,652 | Form | |
| 7 | Smith, Bradford L | Vice Chair and President | Direct | Sell | 12122025 | 438.82 | 3,812 | 1,672,781 | 198,169,556 | Form |
| 8 | Smith, Bradford L | Vice Chair and President | Direct | Sell | 12122025 | 390.57 | 30 | 11,717 | 177,870,321 | Form |
| 9 | Smith, Bradford L | Vice Chair and President | Direct | Buy | 12122025 | 377.46 | 3,842 | 1,450,221 | 171,912,193 | Form |
| 10 | Numoto, Takeshi | EVP, Chief Marketing Officer | Direct | Sell | 12052025 | 478.72 | 2,850 | 1,364,352 | 26,703,825 | Form |
| 11 | Althoff, Judson | CEO Microsoft Commercial | Direct | Sell | 12032025 | 491.52 | 12,750 | 6,266,829 | 63,576,946 | Form |
| 12 | Smith, Bradford L | Vice Chair and President | Direct | Sell | 11042025 | 518.64 | 38,500 | 19,967,707 | 239,403,350 | Form |
| 13 | Nadella, Satya | Chief Executive Officer | Direct | Sell | 9042025 | 504.78 | 149,205 | 75,315,121 | 399,203,394 | Form |
| 14 | Numoto, Takeshi | EVP, Chief Marketing Officer | Direct | Sell | 8132025 | 527.32 | 4,850 | 2,557,506 | 20,624,148 | Form |
Investor Activity (13F)
Updated Jul 23, 2026Active managers (13F portfolio over $250M, at least 3 holdings) with a position over $5M that is either over 10% of their portfolio or held in a concentrated book of 50 or fewer total positions. Index/ETF, sovereign, bank, community-bank and charitable/donor-advised filers are excluded.
| Active Manager | Value | % of Portfolio | Total Positions | QoQ | Filing |
|---|---|---|---|---|---|
| Joho Capital LLC | $114.1 Mil | 30.6% | 10 | TRIM -14.2% | 13F |
| DDD Partners, LLC | $426.7 Mil | 29.6% | 134 | Hold | 13F |
| Elite Wealth Management, Inc. | $87.5 Mil | 28.4% | 49 | Hold | 13F |
| Armstrong Henry H Associates Inc | $232.6 Mil | 23.7% | 62 | Hold | 13F |
| Marathon Trading Investment Management LLC | $76.1 Mil | 22.6% | 192 | New | 13F |
| Palidye Holdings (Caymans) Ltd | $114.2 Mil | 21.2% | 15 | Hold | 13F |
| Union Bancaire Privee, UBP SA | $1.5 Bil | 20.5% | 487 | Hold | 13F |
| Ulysses Management LLC | $52.3 Mil | 19.7% | 28 | Hold | 13F |
| Crake Asset Management LLP | $541.0 Mil | 18.9% | 20 | ADD +21.1% | 13F |
| C Partners Holding GmbH | $57.5 Mil | 18.2% | 7 | Hold | 13F |
| Fortis Capital Management LLC | $132.7 Mil | 17.7% | 206 | ADD +13.4% | 13F |
| Meritage Group LP | $470.3 Mil | 17.7% | 13 | Hold | 13F |
| Skandinaviska Enskilda Banken AB (publ) | $763.0 Mil | 17.6% | 346 | New | 13F |
| Milestones Administradora de Recursos Ltda. | $66.4 Mil | 17.3% | 17 | ADD +104.6% | 13F |
| Altarock Partners LP | $691.3 Mil | 16.8% | 8 | TRIM -10.3% | 13F |
| Voyager Global Management LP | $490.5 Mil | 16.7% | 8 | ADD +29.3% | 13F |
| Pershing Square Capital Management, L.P. | $2.1 Bil | 15.3% | 11 | New | 13F |
| First Foundation Advisors | $369.9 Mil | 14.9% | 572 | Hold | 13F |
| Generation Investment Management LLP | $1.7 Bil | 14.8% | 29 | ADD +8.3% | 13F |
| Metropolis Capital Ltd | $435.8 Mil | 14.7% | 16 | ADD +40.4% | 13F |
| Cat Rock Capital Management LP | $92.1 Mil | 14.3% | 14 | ADD +19.7% | 13F |
| Delta Asset Management Llc/Tn | $153.9 Mil | 14.0% | 597 | Hold | 13F |
| Standard Investments LLC | $229.5 Mil | 13.5% | 11 | New | 13F |
| Brighton Jones LLC | $312.2 Mil | 13.2% | 24 | ADD +14.3% | 13F |
| SRB Corp | $213.1 Mil | 13.1% | 44 | TRIM -16.9% | 13F |
| Active Manager | Value | % of Portfolio | Total Positions | QoQ | Filing |
|---|---|---|---|---|---|
| Pershing Square Capital Management, L.P. | $2.1 Bil | 15.3% | 11 | New | 13F |
| Skandinaviska Enskilda Banken AB (publ) | $763.0 Mil | 17.6% | 346 | New | 13F |
| DSM Capital Partners LLC | $570.8 Mil | 10.1% | 44 | New | 13F |
| Caxton Associates LLP | $479.2 Mil | 11.1% | 752 | New | 13F |
| Vulcan Value Partners, LLC | $410.5 Mil | 10.9% | 33 | New | 13F |
| Consulta Ltd | $249.9 Mil | 12.4% | 13 | New | 13F |
| Standard Investments LLC | $229.5 Mil | 13.5% | 11 | New | 13F |
| Harvard Management Co Inc | $189.9 Mil | 10.5% | 17 | New | 13F |
| Jia Investment Alliance PTE. LTD. | $95.6 Mil | 10.0% | 24 | New | 13F |
| Marathon Trading Investment Management LLC | $76.1 Mil | 22.6% | 192 | New | 13F |
| Unio Capital LLC | $44.8 Mil | 9.6% | 21 | New | 13F |
| Pennant Investors, LP | $36.8 Mil | 10.2% | 17 | New | 13F |
| Spinecap SAS | $31.3 Mil | 11.5% | 15 | New | 13F |
| Vienna Powszechne Towarzystwo Emerytalne S.A. Vienna Insurance Group | $28.3 Mil | 10.8% | 28 | New | 13F |
| Milestones Administradora de Recursos Ltda. | $66.4 Mil | 17.3% | 17 | ADD +104.6% | 13F |
| Metropolis Capital Ltd | $435.8 Mil | 14.7% | 16 | ADD +40.4% | 13F |
| Voyager Global Management LP | $490.5 Mil | 16.7% | 8 | ADD +29.3% | 13F |
| Crake Asset Management LLP | $541.0 Mil | 18.9% | 20 | ADD +21.1% | 13F |
| Proem Advisors LLC | $33.3 Mil | 11.0% | 29 | ADD +20.0% | 13F |
| Cat Rock Capital Management LP | $92.1 Mil | 14.3% | 14 | ADD +19.7% | 13F |
| Cryder Capital Partners LLP | $177.2 Mil | 11.6% | 10 | ADD +15.4% | 13F |
| Brighton Jones LLC | $312.2 Mil | 13.2% | 24 | ADD +14.3% | 13F |
| Fortis Capital Management LLC | $132.7 Mil | 17.7% | 206 | ADD +13.4% | 13F |
| Spear Holdings RSC Ltd | $104.6 Mil | 11.2% | 17 | ADD +10.1% | 13F |
| PBCay One RSC Ltd | $104.6 Mil | 11.2% | 17 | ADD +10.1% | 13F |
| Active Manager | Value | % of Portfolio | Total Positions | QoQ | As Of | Filing |
|---|---|---|---|---|---|---|
| TCI Fund Management LTD | $8.1 Bil | 15.1% | 9 | Exited | Dec 31, 2025 | 13F |
| BlueSpruce Investments, LP | $717.0 Mil | 18.3% | 9 | Exited | Dec 31, 2025 | 13F |
| Cable Car Capital, LP | $703.8 Mil | 43.7% | 107 | Exited | Dec 31, 2025 | 13F |
| Ursa Fund Management, LLC | $646.8 Mil | 55.7% | 22 | Exited | Dec 31, 2025 | 13F |
| Banque Transatlantique SA | $519.0 Mil | 12.6% | 278 | Exited | Dec 31, 2025 | 13F |
| Sherman Porfolios, LLC | $203.7 Mil | 13.9% | 156 | Exited | Dec 31, 2025 | 13F |
| Elequin Capital, LP | $120.9 Mil | 15.8% | 392 | Exited | Dec 31, 2025 | 13F |
| Wahed Invest LLC | $94.5 Mil | 12.4% | 213 | Exited | Dec 31, 2025 | 13F |
| JBF Capital, Inc. | $82.1 Mil | 11.9% | 76 | Exited | Dec 31, 2025 | 13F |
| Cypress Funds LLC | $76.5 Mil | 12.7% | 14 | Exited | Dec 31, 2025 | 13F |
| M & L Capital Management Ltd | $72.6 Mil | 15.1% | 25 | Exited | Dec 31, 2025 | 13F |
| Criteria Caixa, S.A.U. | $72.3 Mil | 24.9% | 8 | Exited | Dec 31, 2025 | 13F |
| Agave Capital Management Ltd | $70.8 Mil | 11.8% | 23 | Exited | Dec 31, 2025 | 13F |
| Coalescence Partners Investment Management, LP | $59.0 Mil | 13.9% | 12 | Exited | Dec 31, 2025 | 13F |
| SRB Corp | $213.1 Mil | 13.1% | 44 | TRIM -16.9% | Mar 31, 2026 | 13F |
| Joho Capital LLC | $114.1 Mil | 30.6% | 10 | TRIM -14.2% | Mar 31, 2026 | 13F |
| Altarock Partners LP | $691.3 Mil | 16.8% | 8 | TRIM -10.3% | Mar 31, 2026 | 13F |
| BSN CAPITAL PARTNERS Ltd | $253.1 Mil | 11.9% | 41 | TRIM -8.0% | Mar 31, 2026 | 13F |
| Soroban Capital Partners LP | $1.3 Bil | 9.5% | 27 | TRIM -7.8% | Mar 31, 2026 | 13F |
| Active Manager | Value | % of Portfolio | Total Positions | QoQ | Filing |
|---|---|---|---|---|---|
| Pershing Square Capital Management, L.P. | $2.1 Bil | 15.3% | 11 | New | 13F |
| Generation Investment Management LLP | $1.7 Bil | 14.8% | 29 | ADD +8.3% | 13F |
| Union Bancaire Privee, UBP SA | $1.5 Bil | 20.5% | 487 | Hold | 13F |
| Soroban Capital Partners LP | $1.3 Bil | 9.5% | 27 | TRIM -7.8% | 13F |
| Skandinaviska Enskilda Banken AB (publ) | $763.0 Mil | 17.6% | 346 | New | 13F |
| Altarock Partners LP | $691.3 Mil | 16.8% | 8 | TRIM -10.3% | 13F |
| DSM Capital Partners LLC | $570.8 Mil | 10.1% | 44 | New | 13F |
| Crake Asset Management LLP | $541.0 Mil | 18.9% | 20 | ADD +21.1% | 13F |
| Voyager Global Management LP | $490.5 Mil | 16.7% | 8 | ADD +29.3% | 13F |
| Caxton Associates LLP | $479.2 Mil | 11.1% | 752 | New | 13F |
| Meritage Group LP | $470.3 Mil | 17.7% | 13 | Hold | 13F |
| Metropolis Capital Ltd | $435.8 Mil | 14.7% | 16 | ADD +40.4% | 13F |
| DDD Partners, LLC | $426.7 Mil | 29.6% | 134 | Hold | 13F |
| Vulcan Value Partners, LLC | $410.5 Mil | 10.9% | 33 | New | 13F |
| First Foundation Advisors | $369.9 Mil | 14.9% | 572 | Hold | 13F |
| Brighton Jones LLC | $312.2 Mil | 13.2% | 24 | ADD +14.3% | 13F |
| BSN CAPITAL PARTNERS Ltd | $253.1 Mil | 11.9% | 41 | TRIM -8.0% | 13F |
| Consulta Ltd | $249.9 Mil | 12.4% | 13 | New | 13F |
| Armstrong Henry H Associates Inc | $232.6 Mil | 23.7% | 62 | Hold | 13F |
| Standard Investments LLC | $229.5 Mil | 13.5% | 11 | New | 13F |
| SRB Corp | $213.1 Mil | 13.1% | 44 | TRIM -16.9% | 13F |
| Harvard Management Co Inc | $189.9 Mil | 10.5% | 17 | New | 13F |
| Cryder Capital Partners LLP | $177.2 Mil | 11.6% | 10 | ADD +15.4% | 13F |
| Quintet Private Bank (Europe) S.A. | $164.0 Mil | 11.0% | 187 | Hold | 13F |
| Delta Asset Management Llc/Tn | $153.9 Mil | 14.0% | 597 | Hold | 13F |
MSFT Trade Sentinel
Constructive
CONVICTION RATIONALE
Demand for Microsoft's AI platform is accelerating, confirmed by 40% Azure growth and a $627 billion contracted backlog. While massive infrastructure spending pressures near-term margins, management guides for operating margin expansion in fiscal 2026 and double-digit profit growth in 2027, signaling confidence in the investment returns.
STOCK ARCHETYPE
A hybrid of recurring subscription/consumption and transactional sales, dominated by the recurring portion.(Number of Commercial & Consumer Subscribers × ARPU) + (Cloud Consumption × Price per Unit) + Transactional Sales Leveraging economies of scale and software efficiencies to expand operating margins in the high-growth Intelligent Cloud and Productivity segments, offsetting the margin pressure from heavy AI-related capital expenditures.
INVESTMENT THESIS
Evidence points to a successful transition, with AI demand exceeding supply and contracted backlog providing high visibility into future revenue.
- Azure and other cloud services revenue grew 40% in the latest quarter.
- Commercial contracted backlog increased 99% to $627 billion.
- The company's AI business surpassed a $37 billion annual revenue run rate, up 123%.
- Microsoft 365 Copilot has surpassed 20 million paid seats.
- Management expects double-digit revenue and profit growth in fiscal 2027.
PRIMARY RISK
The company plans a $190 billion capital spend for calendar 2026, which has already compressed Microsoft Cloud gross margins. If AI services become commoditized, particularly with OpenAI no longer exclusive, these investments may fail to generate adequate returns, permanently impairing free cash flow.
- Company expects to invest roughly $190 billion in capex for calendar 2026.
- Microsoft Cloud gross margin percentage decreased to 66% due to AI investments.
- The partnership with OpenAI was overhauled, dismantling key pillars of exclusivity.
- The stock fell 5.0% after the last earnings report despite strong results.
- Inventory grew year-over-year, far outpacing revenue growth.
| KPI | Status | Rationale |
|---|---|---|
| Azure and other cloud services revenue growth | 40% year-over-year growth for the quarter ended March 31, 2026 - Stable | The growth rate for Azure has remained remarkably stable at a high level, hovering around 40%. Management commentary indicates this growth is constrained by supply, stating that "Strong customer demand across workloads, customer segments and geographic regions continues to exceed available capacity." |
| Commercial remaining performance obligation (RPO) | $627 billion as of March 31, 2026, up 99% year-over-year. - Accelerating | The headline 99% YoY growth is dramatically skewed by massive, multi-year AI contracts. Management provides a more normalized underlying growth figure, stating that RPO grew 26% "in line with historic seasonality when excluding OpenAI." This underlying rate is more indicative of the core business trend and is stable compared to the 28% ex-OpenAI growth disclosed for the prior quarter. |
| Microsoft Cloud Revenue | $54.5 billion (Q3 FY2026) | The overall performance of Microsoft's collection of cloud services, which is the company's primary growth engine. |
| Microsoft 365 Copilot paid seats | Over 20 million (Q3 FY2026) | The adoption and monetization of Microsoft's flagship AI productivity tool, indicating the success of its strategy to embed AI into core applications. |
Contracted AI Demand vs. Unprecedented Capex
BULL VIEW
The $627 billion commercial backlog, growing 99% year-over-year, proves demand is real and justifies the investment. Management's guidance for operating margin expansion in fiscal 2026 shows the spending is yielding profitable growth.
CORE TENSION
Can 40% Azure growth and a $627 billion backlog generate enough profit to offset the margin pressure from a guided $190 billion in calendar 2026 capex?
PREVAILING SENTIMENT
Current evidence favors the bull case. Management's guidance for operating margin expansion in fiscal 2026 and double-digit profit growth in fiscal 2027 is a direct, dated counterpoint.
BEAR VIEW
The planned $190 billion capex for calendar 2026 is an arms race that has already cut cloud gross margins. Negative stock reactions after strong results show investors fear this spending will not generate sufficient returns.
| Timeline | Event & Metric To Watch |
|---|---|
August 11, 2026 | Securities Lawsuit Developments Watch: Court filings, announcements regarding the lead plaintiff, and any company response or disclosure related to the lawsuit's progression. |
August 11, 2026 | Securities Lawsuit Filing Deadline Watch: A deadline is set for a lead plaintiff motion in a class action lawsuit concerning common stock purchased between May 1, 2025 and January 28, 2026. |
9/1/2026 | Salesforce Earnings Report Watch: Peer Salesforce (CRM) is scheduled to report earnings. |
9/7/2026 | Oracle Earnings Report Watch: Peer Oracle (ORCL) is scheduled to report earnings. |
10/27/2026 | Negative Post-Earnings Reaction Watch: Guidance on FY27 capex and cloud margins, and any signs of slowing AI-related growth. |
10/27/2026 | Intensifying Cloud Competition Watch: Peer cloud growth rates and commentary on AI workload wins from Google and Amazon during their earnings reports. |
No set date | Inventory Build Write-Down Watch: Any commentary on inventory levels, particularly for Surface devices or other hardware, in the next earnings report or filings. |
| Date | Event | Stock Impact |
|---|---|---|
2026-07-14 | Securities Fraud Lawsuit Filed Details: A securities fraud class action lawsuit was filed against Microsoft, alleging the company misled investors regarding its AI chatbot Copilot and cloud platform Azure. | +1.2% $390.99 -> $395.63 |
2026-05-15 | Hedge Fund Reveals Position Details: Billionaire investor Bill Ackman's hedge fund, Pershing Square Capital Management, revealed it had initiated a new position in Microsoft, calling the stock 'highly compelling'. | +3.4% $408.55 -> $422.62 |
2026-05-04 | Agent 365 Product Launch Details: Microsoft took Agent 365, its management platform for AI agents, out of preview and into general availability, signaling a focus on AI governance. | -0.7% $413.54 -> $410.49 |
2026-04-29 | Negative Reaction to Earnings Again Details: Following the Q3 FY2026 earnings call, the stock had a two-day reaction of -5.0% versus 1.0% for the S&P 500. | -5.0% $428.32 -> $406.90 |
2026-04-27 | OpenAI Partnership Overhauled Details: Microsoft and OpenAI announced a sweeping overhaul of their partnership, dismantling key pillars of exclusivity and freeing OpenAI to sell on AWS and Google Cloud. | +1.1% $423.70 -> $428.32 |
2026-02-17 | Partnership for 5G Laptops Details: Microsoft and Ericsson announced a joint solution to bring enterprise-grade 5G laptop management to Windows 11, with broad availability from the second quarter of 2026. | -0.4% $399.54 -> $397.83 |
2026-01-28 | Negative Reaction to Earnings Details: The company reported Q2 FY2026 earnings, after which the stock had a two-day reaction of -10.0% versus 0.0% for the S&P 500. | -9.8% $478.45 -> $431.58 |
Position Sizing
2% - 4%
REDUCED POSITION
Sizing is volatility-based: MSFT trades at roughly 34% annualized options-implied volatility versus about 15% for the S&P 500 (2.3x the market), around the 94th percentile of its own trailing year. A 2% - 4% position keeps a single-name swing of that size within a diversified portfolio's risk budget.
Diversification Alternatives
GOOGL - Alphabet
AI Technology LeaderAlphabet offers exposure to frontier AI model development, backed by significantly higher absolute research and development spending ($64.6 billion vs. $34.4 billion) than Microsoft.
AMZN - Amazon.com
Cloud Infrastructure ScaleAmazon Web Services is the largest cloud provider by revenue and invests more in absolute capital expenditures ($151 billion vs. $97.2 billion), suggesting superior scale and potential cost advantages.
An enterprise-entrenched technology giant leveraging its scale and software expertise to build the essential, full-stack platform for the AI era.
Microsoft is capitalizing on the AI transition by owning every layer of the technology stack, from custom silicon and global data centers (the 'AI factory') to the AI models and the end-user applications (Copilots). This integrated approach creates a powerful flywheel: massive infrastructure investment supports the growth of high-value AI services, which in turn drives more demand for the underlying cloud platform. The company's deep enterprise roots provide a captive audience for upselling these new AI capabilities, turning its legacy software business into a launchpad for its next growth phase.
Sustained or accelerating Azure growth, continued strong growth in Copilot paid seats, and stabilization of cloud gross margins despite high capex.
A slowdown in Azure growth, flattening Copilot adoption, or a prolonged decline in cloud margins indicating that AI capital investments are not generating sufficient returns.
Short-term stock price reactions to earnings, or headlines regarding shareholder lawsuits unless they result in material financial or operational consequences.
Repricing Catalyst
Continued evidence of successful AI monetization, demonstrated by strong growth in Azure AI services and Microsoft 365 Copilot seats, confirming that the heavy investment cycle is translating into durable, high-margin revenue growth.
Productivity and Business Processes
$130.2B TTM (43% of Total) · 59% MarginWhat It Is
This segment sells a portfolio of productivity, communication, and information services to both commercial and consumer customers. Key offerings include Microsoft 365 (incorporating Office, Exchange, SharePoint, Teams, and Copilot), the LinkedIn professional network, and Dynamics business solutions (ERP and CRM).
Who Pays & How
Enterprises and consumers pay for an integrated suite of AI-powered tools to collaborate and improve productivity. Businesses use LinkedIn for talent acquisition, marketing, and sales, and utilize Dynamics for managing core business operations. The primary value proposition is an integrated, secure platform.
Competition
Intelligent Cloud
$120.4B TTM (39% of Total) · 42% MarginWhat It Is
This segment sells public, private, and hybrid server products and cloud services to enterprises, IT professionals, and developers. It is primarily comprised of Azure and other cloud services, on-premises Server products like SQL Server and Windows Server, and Enterprise Services.
Who Pays & How
Organizations pay for a comprehensive set of cloud services to build, deploy, and manage applications. They choose Azure for its hybrid cloud capabilities, global datacenter network, developer productivity tools, and integrated data, AI, security, and compliance features.
Competition
More Personal Computing
$54.8B TTM (18% of Total) · 27% MarginWhat It Is
This segment sells products and services geared towards consumers and commercial customers, including the Windows operating system sold to Original Equipment Manufacturers (OEMs), first-party devices like Surface, Gaming products including Xbox consoles, content, and services, and Search and news advertising.
Who Pays & How
PC manufacturers (OEMs) pay for Windows licenses. Consumers purchase devices and gaming products for entertainment and personal use. Advertisers pay to reach a global audience through search and news platforms.
Competition
Microsoft — Investor Video Playlist
Industry Resources
| Information Technology Resources |
| TechCrunch |
| Wired |
| CIO |
| MIT Technology Review |
| Gartner Insights |
| Ars Technica |
| Systems Software Resources |
| CNET |
| ZDNet |
| Gartner |
| Software Development Times |
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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