Equity Analysis

NASDAQ: MSFT · Technology

Microsoft Corporation

Microsoft is a global technology leader spanning cloud computing (Azure), productivity software (Microsoft 365), operating systems (Windows), gaming (Xbox), and professional networking (LinkedIn). Under CEO Satya Nadella, the company has transformed from a Windows-licensing business into a subscription- and cloud-first enterprise, with Azure and Intelligent Cloud now the primary growth engine and AI infrastructure investment (OpenAI partnership, Copilot) the next major catalyst.

cloud AI dividend blue chip enterprise software
LAST PRICE
$481.63
▲ +1.28 (0.27%) today
52w: $349.20 – $553.72
Market cap $3.6T
P/E ratio 35.3x
Volume 23.7M
Next earnings 2026-01-27
FY2025 — Fiscal Year Ended June 2025
Revenue $281.7B +14.9%
Net Income $101.8B +15.5%
EPS (diluted) $13.64 +15.6%
EBITDA Margin 57.7% +4.0pp
CapEx $64.6B +45.1%
7.8
Score /10
Growth ↑
7.8/10
Margins ↑
9.3/10
Fin.Health ↑
9.5/10
Valuation ↓
4.5/10
Dividends →
6.8/10
Risks ↑
8.6/10
📑
Financials & ratios
2013–2025 · last column shows CAGR or average
Metric 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 CAGR / ø
Growth
Revenue 77,849 86,833 93,580 91,154 96,571 110,360 125,843 143,015 168,088 198,270 211,915 245,122 281,724 +11.3%/y
Net income 21,863 22,074 12,193 20,539 25,489 16,571 39,240 44,281 61,271 72,738 72,361 88,136 101,832 +13.7%/y
EPS 2.58 2.63 1.48 2.56 3.25 2.13 5.06 5.76 8.05 9.65 9.68 11.8 13.64 +14.9%/y
Gross margin % 73.81 68.82 64.7 64.04 64.52 65.25 65.9 67.78 68.93 68.4 68.92 69.76 68.82 ø 67.7
Operating margin % 34.38 32.11 30.1 29.83 30.37 31.77 34.14 37.03 41.59 42.06 41.77 44.64 45.62 ø 36.6
Profit margin % 28.08 25.42 13.03 22.53 26.39 15.02 31.18 30.96 36.45 36.69 34.15 35.96 36.15 ø 28.6
ROIC % 24.93 21.31 16.24 18.06 16.38 9.21 21.91 23.48 29.99 32.75 28.64 29.36 28.23 ø 23.1
Cash
Cash from ops 28,833 32,502 29,668 33,325 39,507 43,884 52,185 60,675 76,740 89,035 87,582 118,548 136,162 +13.8%/y
CapEx -4,257 -5,485 -5,944 -8,343 -8,129 -11,632 -13,925 -15,441 -20,622 -23,886 -28,107 -44,477 -64,551 +25.4%/y
Free cash flow 24,576 27,017 23,724 24,982 31,378 32,252 38,260 45,234 56,118 65,149 59,475 74,071 71,611 +9.3%/y
FCF yield % 8.49 7.81 6.57 6.16 5.88 4.25 3.72 2.92 2.74 3.38 2.35 2.23 1.94 ø 4.5
Balance sheet
Total equity 78,944 89,784 80,083 71,997 87,711 82,718 102,330 118,304 141,988 166,542 206,223 268,477 343,479 +13.0%/y
Cur. assets 101,466 114,246 122,797 139,660 162,696 169,662 175,552 181,915 184,406 169,684 184,257 159,734 191,131 +5.4%/y
Cur. liabilities 37,417 45,625 49,647 59,357 55,745 58,488 69,420 72,310 88,657 95,082 104,149 125,286 141,218 +11.7%/y
Current ratio 2.71 2.5 2.47 2.35 2.92 2.9 2.53 2.52 2.08 1.78 1.77 1.27 1.35 ø 2.2
Debt/equity % 19.76 25.22 44.07 74.25 104.4 98.9 76.58 60.01 47.73 36.79 29.08 25 17.64 ø 50.7
Net debt/EBITDA 0.39 0.42 0.87 1.39 2.06 1.42 1.11 0.76 0.54 0.37 0.12 0.25 0.08 ø 0.8
Shareholder & valuation
Dividend / share 0.89 1.07 1.21 1.39 1.53 1.65 1.8 1.99 2.19 2.42 2.66 2.93 3.24 +11.4%/y
Payout % (DPS/EPS) 34.5 40.7 81.8 54.3 47.1 77.5 35.6 34.5 27.2 25.1 27.5 24.8 23.8 ø 41.1
Shares outst. (M) 8,328 8,239 8,027 7,808 7,708 7,677 7,643 7,571 7,519 7,464 7,432 7,434 7,434 -0.9%/y
Sust. growth % 20.15 16.04 2.72 12.68 17.13 4.34 26.96 26.61 34.94 35 27.35 27.23 25.01 ø 21.2
P/E 13.23 15.68 29.61 19.74 20.95 45.82 26.19 34.97 33.37 26.47 35.04 37.68 36.31 ø 28.9
EV/EBITDA 7.47 8.55 8.78 10.23 12.92 15.61 17.8 22.56 24.29 19.23 24.27 25.15 22.52 ø 16.9
Price / book 3.75 4.02 4.65 5.76 6.13 8.94 10.01 13.45 14.59 11.24 11.93 12.12 10.66 ø 9.0
📈
Charts
Trends across all years
🏢
Business Overview
What they do & how they make money

Microsoft Corporation was founded in 1975 by Bill Gates and Paul Allen. Today, under CEO Satya Nadella, it is one of the world's most valuable companies, organized around three segments: Productivity and Business Processes (Microsoft 365, LinkedIn, Dynamics), Intelligent Cloud (Azure, server products), and More Personal Computing (Windows, Xbox, Surface, Search/advertising). The strategic shift to cloud and subscription revenue, combined with a deep partnership with OpenAI and the Copilot AI product family, has repositioned Microsoft as a central infrastructure provider for enterprise AI adoption.

Revenue by segment
Intelligent Cloud (Azure)
43%
Productivity & Business Processes
33%
More Personal Computing
24%
Revenue
$282B
FY2025
EBITDA Margin
57.7%
FY2025
FCF
$71.6B
FY2025
Net Debt/EBITDA
0.08x
FY2025
ROIC
28.2%
FY2025
Dividend Streak
11+ yrs
Consecutive raises
⚠ Review due — price has moved outside the last assessed fair-value range
💰
Fair Value
Where does $481.63 sit?
BUY
FAIR
EXPENSIVE
$330 $370 $410 $471+
Below $370 — undervalued
$370–410 — fairly valued
Above $410 — rich
🛡
Risk Assessment
Headwinds vs tailwinds
⚠Capital expenditure nearly quintupled from $23.9B (FY2022) to $64.6B (FY2025) on AI infrastructure — FCF per share growth has stalled ($9.97 FY2024 to $9.63 FY2025) even as earnings keep growing
✓Revenue grew ~15% YoY to $281.7B (FY2025) with EBITDA margin at a record 57.7% — scale and mix (Azure, Microsoft 365) still expanding profitability
⚠Valuation at 36x earnings sits well above Microsoft's own post-2019 average multiple (~24-30x) — priced for continued flawless Azure/AI execution
✓ROIC of 28.2%, sustained above 20% every year since FY2019 — durable moat evidence across the cloud/enterprise software stack
⚠AI capex is a bet on future monetization (Copilot, Azure AI services) that has not yet fully shown up in cash generation — a slower-than-expected payoff would pressure the multiple
✓Net debt/EBITDA of just 0.08x — effectively debt-free on a net basis, among the strongest balance sheets in mega-cap tech
⚠Enterprise software and cloud spending are cyclical to broader IT budgets — a macro slowdown would disproportionately hit Azure growth rates
✓Azure and cloud infrastructure remain the primary growth engine, with the OpenAI partnership and Copilot positioning Microsoft at the center of enterprise AI adoption
⚠Regulatory scrutiny of cloud/AI market concentration (EU, US) is a structural overhang on the largest hyperscalers
✓11+ consecutive years of dividend increases with a conservative ~24% payout ratio — ample room to keep raising it
🔬
Analyst Verdict
Bull case, bear case & final call
Buy
🐂 Bull case
Revenue grew ~15% YoY to $281.7B (FY2025) with EBITDA margin at a record 57.7% — scale and mix (Azure, Microsoft 365) still expanding profitability
ROIC of 28.2%, sustained above 20% every year since FY2019 — durable moat evidence across the cloud/enterprise software stack
Net debt/EBITDA of just 0.08x — effectively debt-free on a net basis, among the strongest balance sheets in mega-cap tech
Azure and cloud infrastructure remain the primary growth engine, with the OpenAI partnership and Copilot positioning Microsoft at the center of enterprise AI adoption
11+ consecutive years of dividend increases with a conservative ~24% payout ratio — ample room to keep raising it
🐻 Bear case
Capital expenditure nearly quintupled from $23.9B (FY2022) to $64.6B (FY2025) on AI infrastructure — FCF per share growth has stalled ($9.97 FY2024 to $9.63 FY2025) even as earnings keep growing
Valuation at 36x earnings sits well above Microsoft's own post-2019 average multiple (~24-30x) — priced for continued flawless Azure/AI execution
AI capex is a bet on future monetization (Copilot, Azure AI services) that has not yet fully shown up in cash generation — a slower-than-expected payoff would pressure the multiple
Enterprise software and cloud spending are cyclical to broader IT budgets — a macro slowdown would disproportionately hit Azure growth rates
Regulatory scrutiny of cloud/AI market concentration (EU, US) is a structural overhang on the largest hyperscalers
Bottom line: Microsoft is a Stalwart compounder executing one of the cleanest cloud-to-AI transitions in big tech. Revenue grew ~15% in FY2025 to $281.7B, EBITDA margin hit a record 57.7%, and the balance sheet is essentially net-debt-free (0.08x EBITDA). The one thing to watch: AI infrastructure capex nearly quintupled from $23.9B (FY2022) to $64.6B (FY2025), compressing free cash flow growth even as the income statement keeps improving — this is a bet that Azure/Copilot monetization catches up to the spend, not yet fully proven in the FCF numbers. At $401.63 and 36x earnings, valuation is above Microsoft's own post-2019 average (~24-30x) — a quality premium that's justified by execution so far, but leaves less room for disappointment than the multiple suggests.
Key statistics
Price $481.63
Market cap $3.6T
Revenue (latest) $281.7B
Net income $101.8B
Free cash flow $71.6B
EPS (latest) $13.64
P/E ratio 35.3x
EV/EBITDA 22.52x
FCF yield 2%
Dividend yield 0.67%
DPS $3.24
Div. streak 21+ yrs
Gross margin 68.8%
Op. margin 45.6%
Net margin 36.2%
ROIC 28.2%
Net debt/EBITDA 0.08x
Next earnings 2026-01-27