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Microsoft (MSFT) will reveal its numbers for its fiscal Q3 2025 next week on April 30. The results come as President Donald Trump’s tariff policies upend global trade and spur a rise in expectations for an economic slowdown ahead. The much-loved tech sector has been the biggest casualty of the upheaval so far, with the Nasdaq Composite Index ($NASX) sliding 10.2% on a YTD basis.
In such a scenario, Microsoft’s numbers and management commentary can act as a critical signal of the sector’s health.
So how have Microsoft’s results stacked up in recent quarters, and are the company’s initiatives exciting enough to warrant MSFT a place in investors’ portfolios? Let’s find out.
Sound Fundamentals
Microsoft’s financial strength and prudent balance sheet management, accompanied by consistently rising revenue and earnings over the years, have made the company’s stock a favorite with investors. Although the $2.9 trillion market cap company has seen its shares decline by 7.4% on a YTD basis, in the past 10 years its revenue and earnings have clocked compound annual growth rates (CAGRs) of 10.85% and 16.19%, respectively.
Coming to the results of the most recent quarter, Microsoft reported a beat on both the revenue and earnings fronts. In the December quarter, the company’s revenues came in at $69.6 billion which marked yearly growth of 12.3% as both product and services segments witnessed increases. Earnings rose by 10.2% in the same period to $3.23 per share, surpassing the Street expectations of EPS of $3.12. Notably, this marked the 10th consecutive quarter of earnings beats from the company.
Net cash from operations also remained solid as it came in at $22.3 billion, up from $18.9 billion in the year-ago period, as Microsoft ended 2024 with a cash balance of $71.5 billion with no short-term debt on its books.
Analysts are predicting Microsoft to have forward revenue and earnings growth rates at 14.04% and 15.75%, higher than the sector medians of 6.76% and 10.08%, respectively.
Overall, ahead of the fiscal Q3 results, analysts are expecting Microsoft to report earnings of $3.20 per share which would represent year-over-year growth rate of 8.8%.
Strategic Drivers
Microsoft’s entrenched leadership in artificial intelligence and cloud computing, underpinned by its solid financial foundation, continues to reinforce its status as a compelling long-term investment — despite recent headwinds in stock price performance. While concerns around tariffs and near-term margin pressures persist, the company’s core revenue streams from software and cloud-based subscriptions have demonstrated notable resilience, with minimal long-term disruptions expected.
Crucially, Microsoft’s AI-forward strategy, anchored by its strategic partnership with OpenAI — the developer of ChatGPT — gives it a significant edge. By embedding advanced AI capabilities across its core offerings such as Office and Azure, Microsoft has managed to meaningfully differentiate itself from peers. Early adoption metrics for Microsoft 365 Copilot underscore this momentum. In the first half of fiscal 2025, management emphasized that initial traction among enterprise clients has exceeded expectations. As of the latest update, 85% of Fortune 500 companies are now utilizing Microsoft 365 Copilot, a notable rise from 70% reported in the previous quarter.
In parallel, Microsoft continues to post healthy double-digit growth, thanks in large part to its ongoing improvements in monetizing a massive user base through indispensable enterprise tools. Beyond Microsoft 365, Azure’s expanding role in the global cloud ecosystem serves as a critical buffer against looming tariff risks. With its robust infrastructure supporting the broader AI evolution, Azure has become deeply integrated within enterprise systems. This is evidenced by a spike in demand for Azure compute resources, rising user engagement with Microsoft Fabric and Power BI, and increasing run times for Azure AI Foundry — all highlighted during the company’s fiscal second-quarter earnings call.
Analyst Opinions on Microsoft Stock
Considering this, analysts have attributed a rating of “Strong Buy” for the stock with a mean target price of $492 which denotes uspide potential of about 26% from current levels. Out of 45 analysts covering the stock, 37 have a “Strong Buy” rating, four have a “Moderate Buy” rating, and four have a “Hold” rating.
