Microsoft (MSFT)
Market Price (10/30/2026): $529.11 | Market Cap: $3.9 TrilInvestor Relations Sector: Information Technology | Industry: Systems Software
Microsoft (MSFT)
Market Price (10/30/2026): $529.11Market Cap: $3.9 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 57%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 17%, CFO LTM is 196 Bil, FCF LTM is 60 Bil Stock buyback supportStock Buyback 3Y Total is 57 Bil Low stock price volatilityVol 12M is 33% Megatrend and thematic driversMegatrends include Artificial Intelligence, Cloud Computing, Cybersecurity, Digital Content & Streaming, Show more. | Trading close to highsDist 52W High is -2.4%, Dist 3Y High is -2.4% Weak multi-year price returns2Y Excs Rtn is -6.5%, 3Y Excs Rtn is -18% | 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 57%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 17%, CFO LTM is 196 Bil, FCF LTM is 60 Bil |
| Stock buyback supportStock Buyback 3Y Total is 57 Bil |
| Low stock price volatilityVol 12M is 33% |
| Megatrend and thematic driversMegatrends include Artificial Intelligence, Cloud Computing, Cybersecurity, Digital Content & Streaming, Show more. |
| Trading close to highsDist 52W High is -2.4%, Dist 3Y High is -2.4% |
| Weak multi-year price returns2Y Excs Rtn is -6.5%, 3Y Excs Rtn is -18% |
| 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 40% since 6/30/2026 because of the following key factors:
1. Microsoft reported an exceptional fiscal Q1 2027 earnings beat, significantly surpassing analyst expectations.
For its first fiscal quarter ended September 30, 2026, Microsoft announced revenue of $92.3 billion, an increase of 19% year-over-year, exceeding the consensus estimate of $90.6 billion. Diluted earnings per share (EPS) for the quarter rose 32% to $4.92, outperforming the $4.72 analyst consensus. This strong financial performance, particularly the revenue and EPS beats, positively impacted investor sentiment and the stock price.
2. Robust growth in Microsoft Cloud, particularly Azure, driven by accelerating AI demand, fueled the stock's surge.
Microsoft Cloud revenue for fiscal Q1 2027 reached $63.9 billion, marking a 30% year-over-year increase. A key highlight was Azure, which saw its revenue grow by an impressive 48%, exceeding both Microsoft's own forecast of 44%-45% and analyst expectations of $32.32 billion, reaching $33.2 billion. This accelerated growth in Azure was largely attributed to strong demand for AI infrastructure and services, including a more than tripling of revenue from Microsoft Foundry, its AI development platform, which now serves over 120,000 customers. Furthermore, the adoption of AI-powered Copilot assistants expanded, with daily users increasing nearly 50% quarter-over-quarter and active customers consuming AI credits rising over 75%.
Show more
Microsoft (MSFT) stock has gained about 40% since 6/30/2026 because of the following key factors:
1. Microsoft reported an exceptional fiscal Q1 2027 earnings beat, significantly surpassing analyst expectations.
For its first fiscal quarter ended September 30, 2026, Microsoft announced revenue of $92.3 billion, an increase of 19% year-over-year, exceeding the consensus estimate of $90.6 billion. Diluted earnings per share (EPS) for the quarter rose 32% to $4.92, outperforming the $4.72 analyst consensus. This strong financial performance, particularly the revenue and EPS beats, positively impacted investor sentiment and the stock price.
2. Robust growth in Microsoft Cloud, particularly Azure, driven by accelerating AI demand, fueled the stock's surge.
Microsoft Cloud revenue for fiscal Q1 2027 reached $63.9 billion, marking a 30% year-over-year increase. A key highlight was Azure, which saw its revenue grow by an impressive 48%, exceeding both Microsoft's own forecast of 44%-45% and analyst expectations of $32.32 billion, reaching $33.2 billion. This accelerated growth in Azure was largely attributed to strong demand for AI infrastructure and services, including a more than tripling of revenue from Microsoft Foundry, its AI development platform, which now serves over 120,000 customers. Furthermore, the adoption of AI-powered Copilot assistants expanded, with daily users increasing nearly 50% quarter-over-quarter and active customers consuming AI credits rising over 75%.
3. Strong future guidance and significant commercial remaining performance obligations signaled sustained growth.
Microsoft provided an optimistic outlook for fiscal Q2 2027, projecting revenue between $96.0 billion and $97.1 billion, and anticipating Azure growth to further accelerate to 49%-50% at constant currency. The company's commercial remaining performance obligations (RPO), a key indicator of future contracted revenue, reached $683 billion, including $677 billion commercial, reflecting a 73% increase year-over-year. This substantial backlog offers strong visibility into future business and underscores sustained customer commitment to Microsoft's cloud and AI offerings.
4. Strategic workforce reductions aimed at cost optimization supported profitability amidst significant AI infrastructure investments.
Microsoft implemented several workforce restructuring initiatives, including 4,800 job cuts in July 2026 (approximately 2.1% of its global workforce) and a new voluntary exit offer in October 2026 extended to about 60,000 employees, representing roughly a quarter of its workforce. These actions were taken to manage operating costs and enhance efficiency as the company continues to make massive investments in AI infrastructure and data centers. Capital expenditures reached $45.2 billion in fiscal Q1 2027, with plans to exceed $50 billion in fiscal Q2 2027, reflecting the scale of investment in datacenter, cloud capacity, and AI training. The workforce adjustments help to mitigate the impact of these high investment costs on overall profitability.
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Stock Movement Drivers
Fundamental Drivers
The 42.4% change in MSFT stock from 6/30/2026 to 10/29/2026 was primarily driven by a 25.0% change in the company's P/E Multiple.| (LTM values as of) | 6302026 | 10292026 | Change |
|---|---|---|---|
| Stock Price ($) | 372.32 | 530.14 | 42.4% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 318,273 | 346,445 | 8.9% |
| Net Income Margin (%) | 39.3% | 41.2% | 4.6% |
| P/E Multiple | 22.1 | 27.6 | 25.0% |
| Shares Outstanding (Mil) | 7,426 | 7,426 | 0.0% |
| Cumulative Contribution | 42.4% |
Market Drivers
6/30/2026 to 10/29/2026| Return | Correlation | |
|---|---|---|
| MSFT | 42.4% | |
| Market (SPY) | 3.0% | 52.3% |
| Sector (XLK) | -0.9% | 33.5% |
Fundamental Drivers
The 43.8% change in MSFT stock from 3/31/2026 to 10/29/2026 was primarily driven by a 20.2% change in the company's P/E Multiple.| (LTM values as of) | 3312026 | 10292026 | Change |
|---|---|---|---|
| Stock Price ($) | 368.68 | 530.14 | 43.8% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 305,453 | 346,445 | 13.4% |
| Net Income Margin (%) | 39.0% | 41.2% | 5.4% |
| P/E Multiple | 23.0 | 27.6 | 20.2% |
| Shares Outstanding (Mil) | 7,431 | 7,426 | 0.1% |
| Cumulative Contribution | 43.8% |
Market Drivers
3/31/2026 to 10/29/2026| Return | Correlation | |
|---|---|---|
| MSFT | 43.8% | |
| Market (SPY) | 18.6% | 35.2% |
| Sector (XLK) | 42.2% | 26.6% |
Fundamental Drivers
The 3.2% change in MSFT stock from 9/30/2025 to 10/29/2026 was primarily driven by a 23.0% change in the company's Total Revenues ($ Mil).| (LTM values as of) | 9302025 | 10292026 | Change |
|---|---|---|---|
| Stock Price ($) | 513.72 | 530.14 | 3.2% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 281,724 | 346,445 | 23.0% |
| Net Income Margin (%) | 36.1% | 41.2% | 13.9% |
| P/E Multiple | 37.5 | 27.6 | -26.4% |
| Shares Outstanding (Mil) | 7,430 | 7,426 | 0.1% |
| Cumulative Contribution | 3.2% |
Market Drivers
9/30/2025 to 10/29/2026| Return | Correlation | |
|---|---|---|
| MSFT | 3.2% | |
| Market (SPY) | 16.4% | 39.5% |
| Sector (XLK) | 34.5% | 36.2% |
Fundamental Drivers
The 71.8% change in MSFT stock from 9/30/2023 to 10/29/2026 was primarily driven by a 63.5% change in the company's Total Revenues ($ Mil).| (LTM values as of) | 9302023 | 10292026 | Change |
|---|---|---|---|
| Stock Price ($) | 308.52 | 530.14 | 71.8% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 211,915 | 346,445 | 63.5% |
| Net Income Margin (%) | 34.1% | 41.2% | 20.6% |
| P/E Multiple | 31.7 | 27.6 | -12.9% |
| Shares Outstanding (Mil) | 7,434 | 7,426 | 0.1% |
| Cumulative Contribution | 71.8% |
Market Drivers
9/30/2023 to 10/29/2026| Return | Correlation | |
|---|---|---|
| MSFT | 71.8% | |
| Market (SPY) | 86.2% | 56.9% |
| Sector (XLK) | 134.4% | 56.9% |
Price Returns Compared
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Total [1] | |
|---|---|---|---|---|---|---|---|
| Returns | |||||||
| MSFT Return | 52% | -28% | 58% | 13% | 16% | 10% | 150% |
| Peers Return | 31% | -34% | 64% | 40% | 16% | 2% | 133% |
| S&P 500 Return | 27% | -19% | 24% | 23% | 16% | 13% | 106% |
Monthly Win Rates [3] | |||||||
| MSFT Win Rate | 75% | 25% | 67% | 58% | 42% | 60% | |
| Peers Win Rate | 63% | 28% | 67% | 65% | 53% | 48% | |
| S&P 500 Win Rate | 75% | 42% | 67% | 75% | 67% | 50% | |
Max Drawdowns [4] | |||||||
| MSFT Max Drawdown | -9% | -36% | -13% | -15% | -21% | -27% | |
| Peers Max Drawdown | -15% | -41% | -18% | -20% | -35% | -30% | |
| 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 10/29/2026 (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.
Preserve Wealth
Limiting losses and compounding gains is essential to preserving wealth.
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)
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.
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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.
Peer Outperformance in Systems Software
| Ticker | Name | Rev Growth 3Y Avg | P/E | 1Y | 3Y | 5Y | 5Y Gap |
|---|---|---|---|---|---|---|---|
| MSFT | Microsoft | 16.6% | 27.6x | -1.3% | 60.8% | 66.6% | — |
| CVLT | CommVault Systems | 16.3% | 85.6x | 22.5% | 162.9% | 179.0% | +112pp |
| FTNT | Fortinet | 14.7% | 48.1x | 65.2% | 147.0% | 106.8% | +40pp |
| NTNX | Nutanix | 15.3% | 12.7x | 3.8% | 101.3% | 106.1% | +40pp |
| Industry | Names | 1Y med | 3Y med | 5Y med | Top 3 by 5Y |
|---|---|---|---|---|---|
| Electronic Manufacturing Services | 10 | 33.8% | 133.1% | 253.1% | FLEX 650% · TTMI 562% · JBL 387% |
| Technology Distributors | 9 | 42.2% | 96.0% | 90.9% | AVT 174% · SNX 159% · CNXN 97% |
| Semiconductor Materials & Equipment | 28 | 55.9% | 84.8% | 71.4% | AXTI 645% · LRCX 375% · KLAC 372% |
| Communications Equipment | 36 | 8.9% | 87.9% | 58.8% | LITE 1014% · AAOI 935% · ANET 619% |
| Electronic Components | 26 | 1.3% | 71.6% | 56.0% | CLS 2779% · BELFA 1192% · APH 347% |
| Semiconductors | 55 | 5.9% | 59.0% | 17.8% | MU 1285% · NVDA 739% · AVGO 609% |
| Technology Hardware, Storage & Peripherals | 21 | 13.9% | 107.7% | 9.1% | WDC 916% · SMCI 873% · DELL 846% |
| Internet Services & Infrastructure | 6 | 8.4% | 51.8% | -1.7% | GDDY 53% · VRSN 40% · DOCN 2% |
| Electronic Equipment & Instruments | 27 | -7.2% | 33.9% | -4.7% | PI 162% · OSIS 124% · KEYS 83% |
| IT Consulting & Other Services | 30 | -26.5% | -2.8% | -25.2% | CHRN 410821% · APLD 314% · ADEA 168% |
| Application Software | 126 | -17.7% | -4.3% | -47.1% | PLTR 659% · FROG 202% · AGYS 143% |
| Systems Software ← | 69 | -8.4% | 34.0% | -49.2% | ZETA 296% · CRWD 271% · CVLT 179% |
Latest Trefis Analyses
Research & Analysis
Invest in Strategies
Wealth Management
Peer Comparisons
| Peers to compare with: |
Financials
| Median | |
|---|---|
| Name | |
| Mkt Price | 254.42 |
| Mkt Cap | 3,410.2 |
| Rev LTM | 445,867 |
| Op Inc LTM | 147,628 |
| FCF LTM | 53,273 |
| FCF 3Y Avg | 60,263 |
| CFO LTM | 161,403 |
| CFO 3Y Avg | 130,164 |
Growth & Margins
| Median | |
|---|---|
| Name | |
| Rev Chg LTM | 15.8% |
| Rev Chg 3Y Avg | 13.0% |
| Rev Chg Q | 17.7% |
| QoQ Delta Rev Chg LTM | 4.3% |
| Op Inc Chg LTM | 20.8% |
| Op Inc Chg 3Y Avg | 25.6% |
| Op Mgn LTM | 33.1% |
| Op Mgn 3Y Avg | 31.9% |
| QoQ Delta Op Mgn LTM | 0.4% |
| CFO/Rev LTM | 35.8% |
| CFO/Rev 3Y Avg | 34.1% |
| FCF/Rev LTM | 20.2% |
| FCF/Rev 3Y Avg | 25.3% |
Valuation
| Median | |
|---|---|
| Name | |
| Mkt Cap | 3,410.2 |
| P/S | 7.6 |
| P/Op Inc | 25.3 |
| P/EBIT | 14.8 |
| P/E | 19.4 |
| P/CFO | 18.4 |
| Total Yield | 4.9% |
| Dividend Yield | 0.3% |
| FCF Yield 3Y Avg | 2.4% |
| D/E | 0.0 |
| Net D/E | 0.0 |
Returns
| Median | |
|---|---|
| Name | |
| 1M Rtn | 1.3% |
| 3M Rtn | 9.6% |
| 6M Rtn | 5.4% |
| 12M Rtn | -1.6% |
| 3Y Rtn | 70.3% |
| 1M Excs Rtn | -1.1% |
| 3M Excs Rtn | 1.9% |
| 6M Excs Rtn | -2.6% |
| 12M Excs Rtn | -12.0% |
| 3Y Excs Rtn | -7.4% |
Comparison Analyses
Segment Financials
Revenue by Segment| $ Mil | 2026 | 2025 | 2024 | 2023 | 2022 |
|---|---|---|---|---|---|
| Productivity and Business Processes | 139,996 | 120,810 | 106,820 | 94,151 | 63,364 |
| Intelligent Cloud | 137,791 | 106,265 | 87,464 | 72,944 | 74,965 |
| More Personal Computing | 54,052 | 54,649 | 50,838 | 44,820 | 59,941 |
| Total | 331,839 | 281,724 | 245,122 | 211,915 | 198,270 |
| $ Mil | 2026 | 2025 | 2024 | 2023 | 2022 |
|---|---|---|---|---|---|
| Productivity and Business Processes | 83,879 | 69,773 | 59,661 | 50,074 | 29,690 |
| Intelligent Cloud | 56,972 | 44,589 | 37,813 | 28,411 | 33,203 |
| More Personal Computing | 14,386 | 14,166 | 11,959 | 10,038 | 20,490 |
| Total | 155,237 | 128,528 | 109,433 | 88,523 | 83,383 |
Price Behavior
| Market Price | $530.14 | |
| Market Cap ($ Bil) | 3,936.8 | |
| First Trading Date | 03/13/1986 | |
| Distance from 52W High | -2.4% | |
| 50 Days | 200 Days | |
| DMA Price | $512.10 | $436.53 |
| DMA Trend | up | up |
| Distance from DMA | 3.5% | 21.4% |
| 3M | 1YR | |
| Volatility | 23.3% | 32.9% |
| Downside Capture | 78.18 | 116.99 |
| Upside Capture | 138.87 | 99.11 |
| Correlation (S&P 500) | 61.2% | 39.9% |
| 1M | 2M | 3M | 6M | 1Y | 3Y | |
|---|---|---|---|---|---|---|
| Beta | 1.39 | 1.35 | 1.80 | 0.97 | 0.96 | 0.97 |
| Up Beta | 0.68 | 1.52 | 3.20 | 1.24 | 1.03 | 0.96 |
| Down Beta | 0.25 | 1.34 | 1.33 | 0.51 | 0.73 | 0.88 |
| Up Capture | 168% | 158% | 230% | 124% | 91% | 100% |
| Bmk +ve Days | 6 | 16 | 27 | 66 | 132 | 424 |
| Stock +ve Days | 9 | 23 | 37 | 66 | 125 | 402 |
| Down Capture | 142% | 83% | 40% | 76% | 108% | 101% |
| Bmk -ve Days | 16 | 26 | 37 | 60 | 120 | 328 |
| Stock -ve Days | 13 | 19 | 27 | 60 | 127 | 350 |
[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 | -1.4% | 32.9% | -0.02 | - |
| Sector ETF (XLK) | 25.6% | 26.7% | 0.82 | 35.4% |
| Equity (SPY) | 13.0% | 12.7% | 0.67 | 38.9% |
| Gold (GLD) | 1.2% | 28.4% | 0.03 | 10.8% |
| Commodities (DBC) | 49.5% | 20.6% | 1.83 | -10.9% |
| Real Estate (VNQ) | 7.2% | 14.0% | 0.25 | -1.1% |
| Bitcoin (BTCUSD) | -29.5% | 43.4% | -0.69 | 28.1% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Based On 5-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with MSFT | |
|---|---|---|---|---|
| MSFT | 12.2% | 28.2% | 0.41 | - |
| Sector ETF (XLK) | 19.8% | 26.0% | 0.67 | 71.3% |
| Equity (SPY) | 12.6% | 17.1% | 0.55 | 68.7% |
| Gold (GLD) | 17.2% | 18.9% | 0.73 | 7.3% |
| Commodities (DBC) | 9.4% | 19.5% | 0.36 | 6.1% |
| Real Estate (VNQ) | 1.0% | 18.9% | -0.06 | 34.3% |
| Bitcoin (BTCUSD) | 5.1% | 51.6% | 0.28 | 32.5% |
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 | 26.4% | 27.8% | 0.88 | - |
| Sector ETF (XLK) | 24.3% | 25.1% | 0.88 | 80.8% |
| Equity (SPY) | 15.4% | 17.9% | 0.73 | 75.9% |
| Gold (GLD) | 11.8% | 16.4% | 0.58 | 6.8% |
| Commodities (DBC) | 8.1% | 18.1% | 0.36 | 17.3% |
| Real Estate (VNQ) | 5.2% | 20.7% | 0.21 | 45.0% |
| Bitcoin (BTCUSD) | 62.3% | 66.2% | 1.02 | 21.4% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Returns Analyses
Earnings Returns History
Updated 10/30/2026| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| 10/28/2026 | -0.2% | ||
| 7/29/2026 | 15.5% | 24.8% | 29.6% |
| 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% |
| ... | |||
| SUMMARY STATS | |||
| # Positive | 11 | 12 | 13 |
| # Negative | 14 | 12 | 11 |
| Median Positive | 4.2% | 5.7% | 8.0% |
| Median Negative | -3.3% | -4.8% | -2.7% |
| Max Positive | 15.5% | 24.8% | 29.6% |
| Max Negative | -10.0% | -14.0% | -18.3% |
| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| 10/28/2026 | -0.2% | ||
| 7/29/2026 | 15.5% | 24.8% | 29.6% |
| 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% |
| SUMMARY STATS | |||
| # Positive | 11 | 12 | 13 |
| # Negative | 14 | 12 | 11 |
| Median Positive | 4.2% | 5.7% | 8.0% |
| Median Negative | -3.3% | -4.8% | -2.7% |
| Max Positive | 15.5% | 24.8% | 29.6% |
| Max Negative | -10.0% | -14.0% | -18.3% |
SEC Filings
Expand for More| Report Date | Filing Date | Filing |
|---|---|---|
| 09/30/2026 | 10/28/2026 | 10-Q |
| 06/30/2026 | 07/29/2026 | 10-K |
| 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 |
| Report Date | Filing Date | Filing |
|---|---|---|
| 09/30/2026 | 10/28/2026 | 10-Q |
| 06/30/2026 | 07/29/2026 | 10-K |
| 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 |
Insider Activity
Updated 10/15/2026| # | Owner | Title | Holding | Action | Filing Date | Price | Shares | Transacted Value | Value of Held Shares | Form |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Hood, Amy | EVP, Chief Financial Officer | Direct | Sell | 10142026 | 545.42 | 7,305 | 3,984,303 | 302,925,071 | Form |
| 2 | Hood, Amy | EVP, Chief Financial Officer | Direct | Sell | 9152026 | 498.27 | 41,674 | 20,764,845 | 265,888,282 | Form |
| 3 | Nadella, Satya | Chief Executive Officer | Direct | Sell | 9022026 | 501.46 | 86,525 | 43,388,532 | 244,090,286 | Form |
| 4 | Numoto, Takeshi | EVP, Chief Marketing Officer | Direct | Sell | 8052026 | 496.48 | 4,810 | 2,388,244 | 21,188,500 | Form |
| 5 | Numoto, Takeshi | EVP, Chief Marketing Officer | Direct | Sell | 6122026 | 402.84 | 4,500 | 1,812,780 | 19,121,912 | Form |
| # | Owner | Title | Holding | Action | Filing Date | Price | Shares | Transacted Value | Value of Held Shares | Form |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Hood, Amy | EVP, Chief Financial Officer | Direct | Sell | 10142026 | 545.42 | 7,305 | 3,984,303 | 302,925,071 | Form |
| 2 | Hood, Amy | EVP, Chief Financial Officer | Direct | Sell | 9152026 | 498.27 | 41,674 | 20,764,845 | 265,888,282 | Form |
| 3 | Nadella, Satya | Chief Executive Officer | Direct | Sell | 9022026 | 501.46 | 86,525 | 43,388,532 | 244,090,286 | Form |
| 4 | Numoto, Takeshi | EVP, Chief Marketing Officer | Direct | Sell | 8052026 | 496.48 | 4,810 | 2,388,244 | 21,188,500 | Form |
| 5 | Numoto, Takeshi | EVP, Chief Marketing Officer | Direct | Sell | 6122026 | 402.84 | 4,500 | 1,812,780 | 19,121,912 | Form |
| 6 | Numoto, Takeshi | EVP, Chief Marketing Officer | Direct | Sell | 6102026 | 412.45 | 2,500 | 1,031,125 | 21,434,102 | Form |
| 7 | Althoff, Judson | CEO Microsoft Commercial | Direct | Sell | 6022026 | 460.99 | 15,500 | 7,145,314 | 50,928,771 | Form |
| 8 | Coleman, Amy | EVP, Chief Human Resources Off | Direct | Sell | 5182026 | 411.34 | 1,262 | 519,242 | 18,923,122 | Form |
| 9 | Hogan, Kathleen T | EVP, Strategy | Direct | Sell | 3092026 | 409.52 | 12,321 | 5,045,643 | 56,486,362 | Form |
| 10 | Stanton, John W | Direct | Buy | 2182026 | 397.35 | 5,000 | 1,986,750 | 33,339,652 | Form | |
| 11 | Smith, Bradford L | Vice Chair and President | Direct | Sell | 12122025 | 438.82 | 3,812 | 1,672,781 | 198,169,556 | Form |
| 12 | Smith, Bradford L | Vice Chair and President | Direct | Sell | 12122025 | 390.57 | 30 | 11,717 | 177,870,321 | Form |
| 13 | Smith, Bradford L | Vice Chair and President | Direct | Buy | 12122025 | 377.46 | 3,842 | 1,450,221 | 171,912,193 | Form |
| 14 | Numoto, Takeshi | EVP, Chief Marketing Officer | Direct | Sell | 12052025 | 478.72 | 2,850 | 1,364,352 | 26,703,825 | Form |
| 15 | Althoff, Judson | CEO Microsoft Commercial | Direct | Sell | 12032025 | 491.52 | 12,750 | 6,266,829 | 63,576,946 | Form |
| 16 | Smith, Bradford L | Vice Chair and President | Direct | Sell | 11042025 | 518.64 | 38,500 | 19,967,707 | 239,403,350 | Form |
Investor Activity (13F)
Updated Oct 30, 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
High Conviction
CONVICTION RATIONALE
Conviction is high due to a rare business re-acceleration, visible in both current results and forward-looking contracts. Azure's growth accelerated to 48%, and a $677 billion commercial backlog provides exceptional visibility. This contracted demand justifies the heavy investment cycle, with operating margins expanding to a 47.1% peak, indicating profitable execution on the AI opportunity.
STOCK ARCHETYPE
Hybrid: a mix of recurring subscription (Microsoft 365), consumption (Azure), transactional hardware/license sales (Xbox, Windows OEM), and advertising (Search).(Number of Commercial Customers x (Seats per Customer + Consumption per Customer) x Blended Price per Unit) + (Number of Consumer/OEM Units x Price per Unit) Expanding operating margins in the high-growth, scalable Intelligent Cloud and Productivity and Business Processes segments, driven by operating leverage and a shift to higher-value AI services.
INVESTMENT THESIS
Evidence points to a successful pivot, with accelerating cloud demand and expanding margins.
- Azure revenue growth accelerated for the third consecutive quarter to 48%.
- Commercial backlog grew 73% to $677 billion, providing high revenue visibility.
- Next quarter Azure growth is guided to be even stronger at 49% to 50%.
- Microsoft Cloud revenue accelerated to 30% growth, reaching $63.9 billion.
- Operating margin expanded to a five-year peak of 47.1%.
PRIMARY RISK
The company is investing heavily in AI infrastructure ahead of revenue, risking significant capital if demand falters or competition intensifies, as noted in company filings.
- Capital expenditure represents a massive 39.2% of trailing-twelve-month revenue.
- Inventory grew 62.4% while revenue grew 18.8% in the latest quarter.
- Company filings state investments are made 'in advance of fully developed revenue streams'.
- Management guided for Q2 capital expenditures to be over $50 billion.
- Supply of critical datacenter components is constrained, adding execution risk.
| KPI | Status | Rationale |
|---|---|---|
| Azure Revenue Growth | 48% year-over-year growth for the quarter ended September 30, 2026 - Accelerating | Azure's growth has demonstrated a clear and significant acceleration over the past three quarters. This trajectory indicates strengthening demand for Microsoft's core cloud infrastructure and AI services, which management attributes to broad-based demand across all workloads. |
| Commercial Remaining Performance Obligation (RPO) | $677 billion as of September 30, 2026 - Decelerating | While the year-over-year growth rate for RPO is decelerating from extremely high levels driven by massive AI contracts in the prior year, the backlog remains enormous. Management commentary suggests underlying momentum is healthy, with a recent large Azure commitment mitigating normal seasonal declines. |
| Microsoft Cloud revenue | $63.9 billion (Q1 FY2027 (ended 9/30/2026)) | This is a broad measure of revenue from Azure, Microsoft 365 commercial cloud, and Industry solutions cloud. Its 30% growth rate signals strong, accelerating demand across the company's core cloud offerings. |
| Inventory-versus-revenue growth divergence | 43.6 percentage points (Q1 FY2027 (ended 9/30/2026)) | This metric shows that inventory grew 62.4% while revenue grew 18.8% in the latest quarter. A significant divergence can signal a potential mismatch between supply and demand or a strategic build-up of components, which for Microsoft is likely related to its massive datacenter expansion for AI. |
Contracted Demand vs. Capital Investment Risk
BULL VIEW
Bulls believe the 73% growth in the $677 billion commercial backlog proves demand is real, justifying the aggressive infrastructure buildout and ensuring high returns on capital.
CORE TENSION
Can the massive $677 billion backlog de-risk the equally massive capex spend, which is running at 39.2% of revenue?
PREVAILING SENTIMENT
Current evidence favors the bulls. Management's statement that 'Customer demand continues to exceed available supply' suggests the investment is necessary to meet existing, not just future, demand.
BEAR VIEW
Bears worry the massive capex cycle, with inventory growth at 62.4%, is a speculative bet that could destroy capital if AI adoption slows or competition intensifies.
| Timeline | Event & Metric To Watch |
|---|---|
12/8/2026 | Cloud Demand Signal From Peers Watch: Commentary from Oracle on cloud infrastructure and database demand, which could be a leading indicator for enterprise spending. |
1/26/2027 | AI Capex and Growth Execution Watch: Whether the company meets or misses its Azure growth guidance and commentary on supply chain constraints and CapEx. |
1/27/2027 | Apple Earnings Report Watch: Peer Apple (AAPL) is scheduled to report earnings. |
2/2/2027 | Alphabet Earnings Report Watch: Peer Alphabet (GOOGL) is scheduled to report earnings. |
No set date | Ongoing IRS Tax Dispute Watch: Any news or filings regarding a settlement, court ruling, or change in the reserved amount for this tax contingency. |
| Date | Event | Stock Impact |
|---|---|---|
2026-10-28 | Q1 FY27 Earnings Reported Details: Microsoft reported Q1 FY27 earnings, with Microsoft Cloud revenue surpassing $63 billion, up 30% year-over-year. Azure revenue increased 48%. | -0.1% $531.33 -> $531.01 |
2026-09-29 | ClickHouse Collaboration Expanded Details: At the European Microsoft Fabric + SQL Community Conference, the company announced a significant expansion of its strategic collaboration with ClickHouse, including a native workload for Microsoft Fabric. | +0.7% $509.22 -> $512.90 |
2026-08-04 | Class Action Lawsuits Filed Details: Securities fraud class action lawsuits were filed against Microsoft, alleging the company misled investors regarding its AI chatbot Copilot and cloud platform Azure, leading to a 10% stock drop. | -0.0% $486.73 -> $486.54 |
2026-07-29 | Strong Q4 Earnings Reaction Details: The company reported Q4 FY2026 earnings on July 29, 2026. The two-day stock reaction around the call was 15.0%, while the S&P 500 was unchanged. | +14.7% $392.61 -> $450.25 |
2026-04-27 | OpenAI Partnership Overhauled Details: Microsoft and OpenAI announced a sweeping overhaul of their partnership, dismantling key pillars of exclusivity and revenue-sharing, giving both sides more freedom to pursue rival relations. | +1.1% $422.91 -> $427.52 |
Position Sizing
4% - 6%
NORMAL POSITION
Sizing is volatility-based: MSFT trades at roughly 37% annualized realized (three-month) volatility versus about 11% for the S&P 500 (3.5x the market). A 4% - 6% position keeps a single-name swing of that size within a diversified portfolio's risk budget.
Diversification Alternatives
AMZN - Amazon.com
Pure-play Cloud LeaderAmazon.com offers exposure to the cloud infrastructure boom with a larger revenue base and historical leadership in the IaaS market, which may confer scale advantages.
GOOGL - Alphabet
AI Model InnovatorAlphabet provides exposure to the AI theme through its deep investments in foundational models and custom hardware, which may appeal to customers prioritizing raw model performance.
Microsoft is an AI infrastructure and platform company that monetizes its massive capital investment through both its Azure cloud and its embedded, high-margin enterprise software like Microsoft 365 Copilot.
Microsoft is aggressively building out its global datacenter footprint to capture the generational shift to AI. This investment supports both third-party developers and enterprises building on Azure and its own high-value 'agentic' applications like Copilot, which are deeply integrated into its existing enterprise software ecosystem. The strategy is to own the entire stack, from custom silicon and infrastructure to the AI-powered applications that are becoming essential for productivity, creating a powerful, self-reinforcing growth loop.
Sustained or accelerating Azure growth, strong uptake of premium Microsoft 365 tiers (E7) and Copilot consumption, and evidence of market share gains in cloud infrastructure would confirm the thesis.
A significant slowdown in Azure growth, margin compression from the high cost of AI infrastructure that isn't offset by revenue, or major competitive losses to other hyperscalers would damage the thesis.
Short-term fluctuations in the PC market or gaming segment performance are largely noise relative to the core AI and cloud growth narrative.
Repricing Catalyst
The market is repricing the stock based on accelerating growth in the Microsoft Cloud, particularly the 48% growth in Azure, which signals that the company's massive AI investments are successfully capturing strong enterprise demand.
Productivity and Business Processes
$140.0B TTM (42% of Total) · 60% MarginWhat It Is
This segment sells a portfolio of productivity, communication, and information services to both commercial and consumer customers. Products include Microsoft 365 (Commercial and Consumer), the professional network LinkedIn, and Dynamics business solutions (ERP/CRM).
Who Pays & How
Enterprises and small businesses pay for Microsoft 365 and Dynamics to enhance employee productivity, collaboration, and manage business operations. Consumers subscribe to Microsoft 365 for personal productivity tools. Professionals and enterprises pay for LinkedIn's premium subscriptions for talent, marketing, and sales solutions.
Competition
Intelligent Cloud
$137.8B TTM (42% of Total) · 41% MarginWhat It Is
This segment provides public, private, and hybrid server products and cloud services for modern businesses and developers. It primarily comprises Azure cloud services, server products like SQL Server and Windows Server, GitHub, and enterprise support services.
Who Pays & How
Enterprises, IT professionals, and developers pay for Azure to build, deploy, and manage applications, using its infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) offerings. This allows them to reduce costs and increase agility compared to managing on-premises hardware.
Competition
More Personal Computing
$54.1B TTM (16% of Total) · 27% MarginWhat It Is
This segment's products and services are centered on the customer experience. It includes Windows operating system licensing to Original Equipment Manufacturers (OEMs), Surface devices, Xbox gaming consoles, content, and services, and search advertising through Bing and Microsoft Edge.
Who Pays & How
OEMs pay for Windows licenses to pre-install on PCs. Consumers pay for Surface devices, Xbox hardware, and Xbox content and subscription services like Game Pass. Advertisers pay to deliver relevant search and display ads to a global audience.
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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