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Microsoft (MSFT) reiterated its leadership in artificial intelligence with the introduction of a brand-new “Mu” small language model, an accelerated local model to run on Neural Processing Units (NPUs) on Copilot+ PCs. Introduced as part of a broader edge AI capability initiative, the solution seems to provide low-latency AI features. Wall Street is paying attention, with the stock moving to new all-time highs on June 25 as the software giant continues to convert AI innovation into tangible business victories.
In context, the Mu model isn’t another AI product launch but a sign of the accelerating hardware-software collaboration within custom silicon, Windows, and Azure ecosystems. With good tailwinds from Office 365 and cloud services, Microsoft has become the de facto AI platform company.
About Microsoft Stock
Microsoft (MSFT) is a technology leader, headquartered in Redmond, Washington, which sells software, cloud computing, enterprise services, and AI infrastructure. With a market capitalization of more than $3.6 trillion, institutional investors continue to keep Microsoft as a cornerstone holding due to its diversified business and stable cash flow.
MSFT stock has gained nearly 9% over the past 12 months, including a 16% rally year-to-date. Shares recently hit an all-time high of $494.56, bolstered by AI-driven tailwinds and sustained revenue growth across its cloud and productivity segments.
The stock trades at a forward price-earnings ratio of 36.4x and price-sales ratio of 14.7x, premium multiples. But the valuation itself is a testament to investor confidence in Microsoft’s sustainable revenue model, 36% profit margins, and strategic corporate AI participation. With a return on equity of 32.7% and minimal leverage (0.13x debt-equity ratio), Microsoft remains financially robust.
Microsoft Beats Earnings Estimates
For the third quarter of its fiscal 2025, Microsoft announced great results, surpassing Wall Street estimates on all fronts. Revenue came to $70.1 billion, up 13% year-over-year (15% in constant currency), and net income climbed 18% to $25.8 billion. EPS came to $3.46, up 18% as well, led by strength in Microsoft Cloud, up 20% to $42.4 billion.
What Do Analysts Expect for Microsoft Stock?
Microsoft stock earns a “Strong Buy” rating with 46 analysts tracking the stock. They have given 37 “Strong Buy” and five “Moderate Buy” ratings. Analyst sentiment has remained solidly positive throughout 2025 with the aid of accelerating cloud expansion and new AI product cycles. The consensus price target for Microsoft is $518.98, which implies roughly 6% upside potential from current prices. With the Street-high price target at $626, there could be a possible 28% advance from here over the next 12 months.
