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Microsoft Corporation (MSFT) is a leading global technology company with a market cap of $3.10 trillion. Founded in 1975, Microsoft is headquartered in Redmond, Washington, and develops, licenses, and supports a wide range of software products, services, and devices. The company is renowned for its flagship software products, including the Windows operating system and Microsoft Office suite, as well as its innovative cloud computing platform, Azure. Microsoft also owns LinkedIn, a premier professional networking platform, and Xbox, a popular gaming and entertainment brand, making it a key player in technology and digital entertainment.
Shares of the mega-cap tech company outperformed the broader market over the past year. The stock has gained 24% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 19%. However, in 2024, the stock has gained 10.9%, underperforming the SPX’s 14.2% returns on a YTD basis.
Narrowing the focus, MSFT’s outperformance is also evident compared to the iShares Expanded Tech-Software Sector ETF (IGV). The exchange-traded fund has gained 13.8% over the past year. Also, the stock's YTD gains outshine the ETF’s 2.3% returns over the same time frame.
On Jul. 30, Microsoft released its Q4 results, which led to a slight sell-off, with its stock dipping over 1% the day after the release. The company reported a 15% year-over-year revenue increase to $64.7 billion and a net income of over $22 billion, or $2.95 per share, slightly exceeding analyst estimates. The Intelligent Cloud unit was the largest revenue generator, growing 19% to over $28.5 billion, but Azure's 29% growth fell short of expectations and slowed from the previous quarter's 31%.
For the current fiscal year, ending in June 2025, analysts expect MSFT’s EPS to grow 10.8% to $13.07 on a diluted basis. The company's earnings surprise history is robust. It beat the consensus estimate in each of the last four quarters.
Among the 38 analysts covering MSFT stock, the consensus rating is a “Strong Buy.” That’s based on 34 “Strong Buy” ratings, three “Moderate Buys,” and one “Hold.”
This configuration is slightly more bullish than three months ago, with 33 suggesting a “Strong Buy.”
On Aug. 1, Phillip Securities analyst Paul Chew maintained a ‘Buy’ rating on Microsoft with a price target of $480, implying a potential upside of 15.1% from current levels.
The mean price target of $501.53 represents a 20.2% premium to MSFT’s current price levels. The Street-high price target of $600 suggests an upside potential of 43.8%.
On the date of publication, Rashmi Kumari 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.
