Microsoft Corporation - Market Sentiment Analysis
Market sentiment toward Microsoft is predominantly positive, though with some areas of concern.
Analyst Ratings and Recommendations
Consensus Rating
Strong Buy
Average Price Target
$507.54
(29.04% upside)
Price Target Range
Low: $425.00|High: $600.00
Top Analyst Ratings
| Analyst Firm | Rating | Price Target | Date |
|---|---|---|---|
| Bernstein | Outperform | $500 | Oct 26, 2024 |
| Evercore ISI Group | Outperform | $485 | Apr 27, 2024 |
| Raymond James | Outperform | $480 | Apr 26, 2024 |
| Piper Sandler | Overweight | $520 | Jan 28, 2025 |
| DA Davidson | Neutral | $425 | Jan 30, 2025 |
| RBC Capital | Outperform | $500 | Jan 30, 2025 |
| Mizuho | Outperform | $500 | Jan 31, 2025 |
| Wedbush | Outperform | $550 | Jul 31, 2024 |
Earnings Estimates and Growth Projections
EPS Estimates
| Period | Avg. Estimate | Low Estimate | High Estimate | Year Ago EPS | Growth |
|---|---|---|---|---|---|
| Current Qtr (Mar 2025) | $3.21 | $3.16 | $3.31 | $2.94 | 9.73% |
| Next Qtr (Jun 2025) | $3.33 | $3.21 | $3.57 | $2.95 | 13.39% |
| Current Year (2025) | $13.15 | $12.93 | $13.75 | $11.80 | 11.71% |
| Next Year (2026) | $15.06 | $14.30 | $16.69 | $13.15 | 14.07% |
Revenue Estimates
| Period | Avg. Estimate | Low Estimate | High Estimate | Year Ago Sales | Growth |
|---|---|---|---|---|---|
| Current Qtr (Mar 2025) | $68.53B | $67.14B | $69.90B | $61.86B | 10.79% |
| Next Qtr (Jun 2025) | $72.76B | $71.47B | $74.63B | $64.73B | 12.41% |
| Current Year (2025) | $277.13B | $274.86B | $283.15B | $245.12B | 13.06% |
| Next Year (2026) | $315.96B | $304.21B | $341.76B | $277.13B | 14.01% |
Recent Earnings Performance
Microsoft has consistently beaten earnings estimates in the last four quarters:
| Quarter | EPS Estimate | Actual EPS | Beat By | Surprise % |
|---|---|---|---|---|
| Q4 2024 (Dec 31) | $3.20 | $3.33 | $0.13 | 4.06% |
| Q3 2024 (Sep 30) | $3.04 | $3.23 | $0.19 | 6.25% |
| Q2 2024 (Jun 30) | $2.93 | $2.95 | $0.02 | 0.53% |
| Q1 2024 (Mar 31) | $2.83 | $2.94 | $0.11 | 3.99% |
Market Sentiment Indicators
TipRanks Smart Score
"Outperform"
This proprietary score suggests Microsoft is likely to outperform the market
Bullish Factors
- AI Revenue Growth: Microsoft is seen as a leading software AI winner, with significant boost from the OpenAI deal and AI annual revenue run rate growing 175% year over year.
- Revenue Growth Outlook: Management reiterated belief that the rapidly emerging genAI cycle will allow Microsoft to sustain double-digit revenue and profitability growth for years to come.
- Strong Cloud Performance: The earnings call highlights Microsoft's strong performance in cloud and AI services, with record commercial bookings and significant growth in AI and cloud revenue.
- Consistent Earnings Beats: Microsoft has exceeded analyst expectations in all four quarters of 2024.
Bearish Factors
- Azure Growth Concerns: The ongoing concerns regarding the cadence of Azure growth remain significant for investors, with the stock down 5% after hours following the latest earnings report.
- Gaming and Server Revenue Challenges: There were challenges in Azure non-AI services and declines in gaming and on-premises server revenues.
- Valuation Concerns: With a P/E ratio of 32.0, some analysts consider the stock to be fully valued at current levels.
- Range-Bound Trading: Some analysts describe Microsoft stock as "range bound" in the near term, suggesting limited upside potential in the short run.
Recent News Impact
Key Recent News
- Microsoft Testing OpenAI Alternatives: Microsoft is testing alternatives to OpenAI for its Copilot products, which could impact its AI strategy.
- CoreWeave Contract Rumors: CoreWeave denied rumors about contract cancellations with Microsoft, which had temporarily impacted sentiment.
- AI Model Development: Microsoft is developing alternative AI models to reduce dependency on OpenAI, showing strategic diversification.
- February Jobs Report: The broader market sentiment was impacted by the February jobs report pointing to no interest rate cuts in the immediate future.
Revenue Breakdown
Intelligent Cloud
42.98%
of revenue
Productivity and Business Processes
31.71%
of revenue
More Personal Computing
25.31%
of revenue
Overall Market Sentiment Assessment
The overall market sentiment for Microsoft is predominantly positive, with a strong consensus among analysts recommending the stock as a buy. The average price target of $507.54 represents a significant upside potential of 29.04% from the current price level. Analysts are particularly bullish on Microsoft's AI initiatives and cloud business growth prospects, though there are some concerns about Azure growth rates and valuation.
Microsoft has consistently beaten earnings expectations, and forward estimates project continued strong growth in both revenue and earnings. The company's strategic positioning in AI, cloud computing, and productivity software continues to be viewed favorably by the market.
The sentiment is tempered by some near-term concerns about growth rates in certain segments and valuation metrics, but the long-term outlook remains positive based on Microsoft's strong market position, diversified revenue streams, and leadership in the AI transformation.