Microsoft (NASDAQ:MSFT) Announces Quarterly Earnings Results

Microsoft (NASDAQ:MSFT) posted its quarterly earnings data on Wednesday. The software giant reported $4.74 earnings per share (EPS) for the quarter, topping the consensus estimate of $4.24 by $0.50, FiscalAI reports. Microsoft had a net margin of 40.31% and a return on equity of 33.07%. The company had revenue of $90.01 billion for the quarter, compared to the consensus estimate of $87.62 billion. During the same quarter in the previous year, the firm posted $3.65 EPS. The business’s revenue was up 17.7% compared to the same quarter last year.

Here are the key takeaways from Microsoft’s conference call:

• Record fiscal year: Microsoft reported fiscal-year revenue above $331 billion, up 18%, with Microsoft Cloud revenue exceeding $214 billion and Azure surpassing $100 billion after growing 41%.
• Azure and AI demand remained exceptionally strong: Azure and other cloud services revenue rose 43%, while customer demand continued to exceed available capacity. Microsoft expects Azure growth of approximately 45% in constant currency in the first quarter, with first-half growth accelerating.
• AI monetization is broadening: Paid Microsoft 365 Copilot seats surpassed 30 million, GitHub Copilot reached 50 million users, and Foundry exceeded 100,000 customers. Microsoft is adding usage-based billing and premium offerings such as E7 to expand revenue beyond traditional per-seat licensing.
• Microsoft is heavily investing in AI infrastructure: Quarterly capital expenditures reached $41 billion, with more than $50 billion expected in the first quarter and approximately $175 billion projected for fiscal 2027 after a lease-accounting reclassification. Management said efficiency gains, pricing, and model diversification should help protect returns and margins.
• PC, gaming, and some legacy businesses face pressure: More Personal Computing revenue declined 4%, Xbox revenue fell 10%, and Microsoft expects Windows OEM and devices revenue to decline in the low 20s in the first quarter. Management also expects fiscal 2027 revenue declines in Windows OEM and devices and mid-single-digit declines in certain on-premises server and product businesses.

Microsoft Price Performance

NASDAQ:MSFT traded up $10.07 on Friday, reaching $461.17. The stock had a trading volume of 24,173,492 shares, compared to its average volume of 37,499,402. The company has a market capitalization of $3.43 trillion, a P/E ratio of 25.72, a price-to-earnings-growth ratio of 1.20 and a beta of 1.13. The company has a quick ratio of 1.27, a current ratio of 1.28 and a debt-to-equity ratio of 0.08. Microsoft has a 1-year low of $349.20 and a 1-year high of $555.45. The stock has a fifty day moving average price of $397.07 and a 200-day moving average price of $405.54.

Microsoft Announces Dividend

The company also recently declared a quarterly dividend, which will be paid on Thursday, September 10th. Investors of record on Thursday, August 20th will be issued a dividend of $0.91 per share. This represents a $3.64 annualized dividend and a yield of 0.8%. The ex-dividend date of this dividend is Thursday, August 20th. Microsoft’s dividend payout ratio (DPR) is currently 20.27%.

Key Stories Impacting Microsoft

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Azure growth beat expectations: Azure revenue rose 43% year over year, above forecasts near 40%, and annual Azure revenue surpassed $100 billion for the first time. Microsoft also guided to roughly 45% Azure growth, reinforcing confidence in sustained enterprise AI demand. Microsoft tops quarterly cloud growth estimates
• Positive Sentiment: Quarterly results exceeded estimates: Revenue reached $90.01 billion, up 17.7% year over year, while adjusted EPS of $4.74 topped the $4.24 consensus. Net income reportedly rose about 31%, providing fundamental support for the rally. Microsoft earnings report
• Positive Sentiment: AI monetization is becoming more visible: Microsoft 365 Copilot surpassed 30 million paid seats, while the commercial remaining-performance-obligation backlog jumped 84% to $678 billion. The backlog offers investors greater visibility into future revenue, although a substantial portion may be linked to OpenAI. Microsoft backlog reaches $678 billion
• Positive Sentiment: Spending fears eased: Microsoft held its capital-expenditure outlook broadly steady and said it expects to remain cash-flow positive in fiscal 2027. Investors viewed this as evidence that data-center investment is becoming more disciplined, unlike concerns surrounding some peers. Analysts subsequently raised several price targets, including targets of $515 to $640.
• Neutral Sentiment: Strategic flexibility: CFO Amy Hood said Microsoft could slow GPU purchases if AI demand weakens. This limits downside from overbuilding but could also constrain growth if capacity remains tight.
• Negative Sentiment: Risks remain: Microsoft faces data-center power and regulatory bottlenecks, a reported cloud-security flaw that could have exposed customers, and U.K. scrutiny of Microsoft 365 AI subscription pricing. Several law firms are also promoting securities-fraud class actions tied to earlier stock losses. Wiz cloud security flaw report

Insiders Place Their Bets

In other news, EVP Takeshi Numoto sold 4,500 shares of the stock in a transaction on Wednesday, June 10th. The stock was sold at an average price of $402.84, for a total transaction of $1,812,780.00. Following the sale, the executive vice president owned 47,468 shares in the company, valued at approximately $19,122,009.12. This represents a 8.66% decrease in their ownership of the stock. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through this link. Also, EVP Amy Coleman sold 1,262 shares of Microsoft stock in a transaction dated Thursday, May 14th. The shares were sold at an average price of $411.34, for a total value of $519,111.08. Following the completion of the transaction, the executive vice president directly owned 46,003 shares of the company’s stock, valued at $18,922,874.02. This represents a 2.67% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Over the last quarter, insiders have sold 23,762 shares of company stock valued at $10,508,361. 0.03% of the stock is currently owned by corporate insiders.

Hedge Funds Weigh In On Microsoft

A number of institutional investors have recently modified their holdings of the stock. Longfellow Investment Management Co. LLC boosted its holdings in Microsoft by 51.3% in the second quarter. Longfellow Investment Management Co. LLC now owns 59 shares of the software giant’s stock valued at $29,000 after acquiring an additional 20 shares during the last quarter. Bernzott Capital Advisors acquired a new stake in Microsoft during the 4th quarter worth $34,000. Timmons Wealth Management LLC bought a new stake in shares of Microsoft during the 4th quarter valued at $36,000. LSV Asset Management acquired a new stake in shares of Microsoft during the fourth quarter worth $44,000. Finally, University of Illinois Foundation bought a new stake in Microsoft in the second quarter valued at about $50,000. 71.13% of the stock is owned by institutional investors.

Wall Street Analyst Weigh In

Several brokerages recently issued reports on MSFT. Barclays lowered their price target on Microsoft from $545.00 to $512.00 and set an “overweight” rating on the stock in a research note on Thursday. Morgan Stanley restated an “overweight” rating on shares of Microsoft in a research report on Thursday. Argus decreased their price target on shares of Microsoft from $620.00 to $510.00 and set a “buy” rating on the stock in a research note on Friday, July 10th. Wells Fargo & Company increased their price objective on shares of Microsoft from $625.00 to $650.00 and gave the company an “overweight” rating in a research note on Thursday. Finally, Robert W. Baird decreased their target price on shares of Microsoft from $540.00 to $500.00 and set an “outperform” rating on the stock in a research report on Wednesday, April 15th. Forty-two analysts have rated the stock with a Buy rating and five have assigned a Hold rating to the company. According to data from MarketBeat.com, the stock presently has a consensus rating of “Moderate Buy” and a consensus target price of $558.64.

About Microsoft

Microsoft Corporation is a global technology company headquartered in Redmond, Washington. Founded in 1975 by Bill Gates and Paul Allen, Microsoft develops, licenses and supports a broad range of software products, services and devices for consumers, enterprises and governments worldwide. Its operations span personal computing, productivity software, cloud infrastructure, enterprise applications, developer tools and gaming.

Microsoft’s product portfolio includes the Windows operating system and the Microsoft 365 suite of productivity and collaboration tools (Office apps, Outlook, Teams).