Is MSFT a Good Stock to Buy”: Deep-Dive Analysis for Strategic Investors in 2025

Cloud solutions distributed through Azure represent one of the principal ways Microsoft makes money. The Azure unit increased its revenue by 27% during the fourth quarter of 2023. Because of its ongoing revenue expansion, Microsoft stays at the forefront of cloud market leadership. The Zacks Rank, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company’s earnings expectations, to make building a winning portfolio easier.

Investors examine financial data primarily to determine their stock investments. The financial performance of Microsoft in 2023 revealed a net income of $72 billion, indicating impressive profitability. The dividend increase made Microsoft stocks enticing for investors planning to hold their shares for the long term. While good value is important, growth investors are more focused on a company’s financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth. Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 30 Buys and three Holds assigned in the last three months.

Stocks Mentioned

Short-term traders may want to wait for a dip to the $470–490 range before getting in. Global factors such as trade wars, tariffs, inflation, or interest rate hikes could impact major tech stocks, including Microsoft. Certain analysts think the tech market is becoming too congested and may experience a readjustment.

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If you like a stock that only has a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible. All this explains why Microsoft stock is down more than 5% since Jan. 27, when DeepSeek’s news rocked the AI world. But is this an opportunity for savvy investors to buy this Magnificent Seven stock on the dip? Microsoft, with a market capitalization of nearly $4 trillion, has more sway over the broader market than nearly every other stock. Strong results and a commensurate stock move could boost to major indexes and brighten the mood on Wall Street.

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Microsoft’s EPS growth is a testament to its ability to increase profitability while growing at the consistent pace it has. Its outstanding shares have only decreased by around 3% over the past five years, so much of the growth can be attributed to its earnings improvement. The direction of a stock’s earnings estimate revisions should always be a key factor when choosing which stocks to buy, since the Scores were created to work together with the Zacks Rank. You want to make sure you’re buying stocks with the highest likelihood of success, and to do that, you’ll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B.

That said, it did beat Wall Street expectations and helped push the stock up. A potential improvement in Microsoft’s earnings growth thanks to its ability to tap the huge addressable opportunity in the cloud-based AI services market points toward a bright future for this AI stock. The company’s massive investment in artificial intelligence (AI) infrastructure came under scrutiny following Chinese start-up DeepSeek’s revelation that it has developed AI models at a fraction of the cost that the tech giant has spent so far.

Its core businesses are rock solid, and the continued adoption of the cloud presents new growth opportunities. Long-term investors shouldn’t give too much weight to Microsoft’s current valuation. AWS is the leading cloud platform, with a 31% market share, but Azure has been picking up steam. Its market share is 25%, well ahead of third-place Alphabet’s Google Cloud, at 11%. AI might not have the immediate effect on Azure’s business that was anticipated, but it’s still well-positioned to be a high-growth area for Microsoft in the near term. The one downside of Microsoft’s latest earnings came from its cloud platform, Azure.

If there is a slowdown in the economy, AI spending could come down, and so could the excitement and demand for AI products is microsoft a good stock to buy and services. The big test will be what happens next quarter for Microsoft and whether its growth rate can accelerate or even remain stable. If it doesn’t, however, that could put downward pressure on Microsoft’s valuation. MSFT has a Growth Style Score of B, forecasting year-over-year earnings growth of 13.9% for the current fiscal year. Investors can count on the Zacks Rank’s success, with #1 (Strong Buy) stocks producing an unmatched +23.93% average annual return since 1988, more than double the S&P 500’s performance.

Separately, Microsoft’s Productivity and Business Processes segment is expected to rise by about 11–12% from last year to roughly $32 billion. Investors will also be paying attention to Microsoft’s capital expenditure plans (capex) and profit margins. Interestingly, the company spent close to $80 billion on capex in Fiscal 2025 in order to expand its AI infrastructure, which includes custom chips and new data centers.

The stock is trading at a big premium

This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1988 it has more than doubled the S&P 500 with an average gain of +23.93% per year. These returns cover a period from January 1, 1988 through October 6, 2025. Zacks Rank stock-rating system returns are computed monthly based on the beginning of the month and end of the month Zacks Rank stock prices plus any dividends received during that particular month. A simple, equally-weighted average return of all Zacks Rank stocks is calculated to determine the monthly return. Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations.

• In 2023, Microsoft generated $232 billion in revenue, a 10% increase over the prior year.
• At $0.75 quarterly, with a forward dividend yield of just over 0.7%, it’s not wowing.
• The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.
• Microsoft’s 0.72% dividend yield ranks below the tech sector average (1.35%), but this surface comparison misses crucial metrics.
• The big test will be what happens next quarter for Microsoft and whether its growth rate can accelerate or even remain stable.
• You want to make sure you’re buying stocks with the highest likelihood of success, and to do that, you’ll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B.

Earnings and Fundamentals

• Its cloud platform, Azure, increased revenue by approximately 35 percent over the previous year.
• That said, it did beat Wall Street expectations and helped push the stock up.
• This $49.1 billion net cash position represents a $11.23 per share “cash cushion” completely excluded from typical valuation multiples.
• Analysts expect Microsoft to report another quarter of strong revenue and earnings growth.

The company allocated $22.6 billion toward capital expenditure last quarter, which was above the $20.95 billion consensus estimate. The company outperformed its peers in terms of return on assets, return on equity and return on invested capital, according to ChartMill. At $0.75 quarterly, with a forward dividend yield of just over 0.7%, it’s not wowing. However, Microsoft has increased its dividend regularly in recent years, and it’s all but certain that it’ll continue that streak. In September 2023, it increased its dividend by 10%, so it’ll be interesting to see if it ups it by the same percentage this go around.

This DCF analysis suggests Microsoft trades within its fair value range, neither significantly overvalued despite its premium multiples nor presenting deep value opportunity – a typical characteristic of high-quality compounders in mature growth phases. These quantitative indicators provide initial parameters, but answering “is MSFT a good stock to buy” requires deeper examination of growth vectors, competitive positioning, and margin sustainability factors. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.

Microsoft (MSFT) Stock Performance

Microsoft doesn’t release revenue numbers for just the Azure platform, but “Azure and other cloud services” revenue increased 29% year over year. This is a slowdown from previous quarters, but not a reason to ring the alarm, in my opinion. Microsoft consistently puts up good financial numbers, and its latest quarter was no different. Its revenue and operating income both increased 15% year over year, which is impressive for a company of its size.

Microsoft stock has moved an average of nearly 6% following its four most recent earnings reports. In July, shares rose about 4% the day after the company reported better-than-expected earnings driven by cloud computing growth. One of the most important reasons Microsoft stock is increasing is due to its dominance in AI and cloud computing. Its cloud platform, Azure, increased revenue by approximately 35 percent over the previous year.

It demonstrates long-term faith and establishes the firm as one of the frontrunners in AI advancement, alongside Nvidia and Google. However, investors will do well to take a closer look at the bigger picture. The demand for Microsoft’s AI offerings is so solid that the company has been witnessing a major uptick in contract sizes and bookings. It saw a terrific jump of 67% in commercial bookings during the quarter on the back of “Azure commitments from OpenAI.” That number is significantly higher than the 17% increase in commercial bookings in the year-ago period. In the past decade, Microsoft’s total returns have outpaced its stock price appreciation by over 150%.

Furthermore, the average MSFT price target of $558.71 per share implies 9% upside potential. At the same time, TipRanks’ AI analyst has an Outperform rating with a $558 price target. It is worth noting that investors will be closely watching Microsoft’s Intelligent Cloud segment, which is expected to generate $28.9 billion in revenue.