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With a market cap of $3.1 trillion, Redmond, Washington-based Microsoft Corporation (MSFT) is a leading technology provider. Dominating the PC software market, it offers a diverse range of products and services, including cloud solutions, productivity applications, and gaming consoles, making it a significant player in both the software and hardware industries. The company is expected to release its fiscal Q1 earnings results for 2025 on Tuesday, Oct. 22.
Ahead of this event, analysts project the technology giant to report a profit of $3.08 per share, reflecting a growth of 3% from $2.99 per share in the year-ago quarter. The company holds a solid track record of consistently surpassing Wall Street's bottom-line estimates in each of the last four quarterly reports. In Q4 2024, MSFT posted an EPS of $2.95, surpassing the consensus estimate by 1.7%.
For fiscal 2025, analysts forecast MSFT to report EPS of $13.04, up 10.5% from $11.80 in fiscal 2024. Looking ahead to fiscal 2026, analysts anticipate EPS to grow 15.2% year-over-year to $15.02.
In 2024, Microsoft rose 10.5%, lagging behind the broader S&P 500 Index's ($SPX) 19.7% gain and the Technology Select Sector SPDR Fund's (XLK) 16% increase on a YTD basis.
Despite beating EPS estimates, Microsoft stock fell over 1% on Jul. 31 due to disappointing cloud computing revenue of $28.5 billion. The cloud unit's underperformance overshadowed strong Q4 total revenue of $64.7 billion, raising concerns about Azure's growth slowing to 29% from 31% in the previous quarter. Additionally, Microsoft’s revenue guidance for the upcoming quarter fell short of analyst expectations, leading to increased investor skepticism.
However, the stock topped the market on Sep. 10 due to positive news regarding a new AI product, "Strawberry," expected to be launched by its heavily invested partner, OpenAI. This development supports Microsoft's strategy to enhance its software offerings with advanced AI capabilities.
Analysts' consensus view on Microsoft stock is bullish, with a "Strong Buy" rating overall. Among 38 analysts covering the stock, 33 suggest a "Strong Buy," three suggest a "Moderate Buy," and the remaining two recommend a "Hold." This configuration is slightly less bullish than three months ago, with 34 analysts suggesting a "Strong Buy." The average analyst price target for MSFT is $503.55, suggesting a potential upside of 21.2% from current levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
