Microsoft (MSFT) shares rose after the company reported better-than-anticipated results for the third quarter of its fiscal 2025 on April 25. The company boasted growth in its cloud and AI-driven businesses.

The stock is up more than 11% over the last five trading sessions, reflecting the optimism surrounding Azure’s accelerating growth and the fast uptick in Copilot products within Microsoft’s suite of software. With macroeconomic uncertainty still ongoing, Microsoft continues to stand out as one of the high-quality compounders with an unshakeable balance sheet and consistent execution.

About Microsoft Stock

Microsoft (MSFT) is an American technology company headquartered in Redmond, Washington. It is active in the areas of software, cloud computing, hardware, and AI infrastructure. It is perhaps most famous for its Windows operating system, the Microsoft Office suite, and the Azure cloud. Microsoft also owns LinkedIn and GitHub and is particularly committed to integrating generative artificial intelligence into its product portfolio. With a market capitalization of more than $3.2 trillion, Microsoft is one of the largest public companies in the world and the backbone of the Nasdaq Composite Index ($NASX) and S&P 500 Index ($SPX).

MSFT shares are up around 3.5% in the year to date, above the Nasdaq Composite Index, which is down around 7.6% during the same timeframe. 

From a valuation perspective, the stock is trading at a forward price-earnings ratio of 32.5x and a price-sales ratio of 12.9x. These are premiums to wider technology sector averages, but are perhaps understandable given Microsoft’s higher-quality profitability metrics, such as 36% profit margin and 18.1% return on assets. Investors believe the premium is indicative of Microsoft’s leadership in cloud infrastructure and high-margin software.

The business also has a modest dividend with a yield of approximately 0.76%. 

Microsoft Beats Expectations on Q3 Earnings

Microsoft released robust fiscal third quarter 2025 results, topping analyst estimates for both revenue and earnings. Total revenue was up 13% from the previous year to $70.1 billion, and net income was up 18% to $25.8 billion. Earnings per share were at $3.46, an 18% improvement, as the company continued to gain traction from broad enterprise takeup of its cloud and artificial intelligence services.

Operating revenue increased to $32.0 billion, an increase of 16% year-over-year. CEO Satya Nadella pointed to AI and cloud as major growth drivers, and said Microsoft is “innovating across the stack to deliver for our customers." Cloud revenue at Microsoft was $42.4 billion, an increase of 20% year-over-year, driven by increasing penetration within core customer workflows.

The Intelligent Cloud segment generated $26.8 billion in revenue, an increase of 21%, driven by 33% growth in cloud services and Azure. Productivity and Business Processes, which encompasses Office, LinkedIn, and Dynamics, generated $29.9 billion, an increase of 10%, driven by Microsoft 365 and Copilot demand. Revenue from More Personal Computing inched 6% higher to $13.4 billion, with search and news ads climbing 21%.

Microsoft returned $9.7 billion to shareholders during the quarter through dividends and buybacks, reflecting its strong cash position. Management affirmed its optimism on long-term growth, pointing to sustained enterprised cloud demand and the improving monetization of its AI efforts. 

What Analysts Forecast for Microsoft Stock

Analysts remain overwhelmingly bullish on Microsoft, maintaining a consistent “Strong Buy” consensus. According to Barchart data, 46 analysts currently cover the stock, with 38 rating it a “Strong Buy,” four a “Moderate Buy,” and only four a “Hold.” The stock has maintained an average rating of 4.74 out of 5, slightly down from 4.78 last month, but still firmly in bullish territory.

Notably, sentiment has remained stable over the past three months, with the majority of analysts maintaining or upgrading to the highest conviction rating. There have been no “Sell” or “Moderate Sell” ratings issued during this period.