olivLaw · US equity research
Microsoft Corp. MSFT
Services-Prepackaged Software · SIC 7372 · Vertical: Services-Prepackaged Software (SIC 7372)
Microsoft is a technology company delivering cloud, AI, productivity software, business platforms, devices and online advertising. In fiscal 2026 revenue rose to $331.8 billion, and Microsoft Cloud revenue reached $214.4 billion, making the company a benchmark for AI adoption across the economy.
The AI analysis may be outdated: new filings came after its sources (see the «AI analysis» section).
At the close of 03 Nov 2026, Microsoft Corp. (MSFT) stock was 520.99 USD (+2.74% on the day), with market capitalisation 3,869.0 bn USD, P/E 27.2 on diluted EPS of 19.16 USD over the last 12 months, dividend yield 0.71%, beta 0.98, 52-week range 352.83–543.45 USD. Latest reported quarter (Q1 2027): revenue of 92.3 bn USD (+18.8% YoY), net income of 36.6 bn USD (+32.0% YoY), diluted EPS 4.92 USD.
Data as of · AI analysis dated · Source: SEC filings and closing prices, computed by olivLaw.
Price history
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Technical reading
- RSI (14)
- 49.4
- neutral
- Bollinger (20, 2)
- 513.53 – 545.79
- in the lower half of the band · %B 0.23 · band width 6.1%
- SMA 50 / 200
- 514.06 / 438.48
- uptrend (price > SMA50 > SMA200)
- MACD (12, 26, 9)
- 2.18 / 5.38
- MACD below signal
Indicators describe past prices; on their own they do not predict direction. On our history the RSI ≤ 40 filter added no return (see the signals methodology).
Performance
| Company | S&P 500 | vs S&P 500 | Vertical median | |
|---|---|---|---|---|
| 1 month | +0.7% | −2.0% | +2.7 pp | — |
| 3 months | +5.7% | −2.2% | +7.9 pp | — |
| 6 months | +26.6% | +4.3% | +22.4 pp | — |
| Year to date | +7.7% | +10.6% | −2.8 pp | — |
| 1 year | +0.8% | +10.5% | −9.7 pp | −3.6% |
| 3 years | +47.7% | +73.7% | −26.0 pp | +15.6% |
| 5 years | +54.9% | +61.7% | −6.9 pp | — |
Price returns, dividends excluded.
Quarterly results
Latest quarter: Q1 2027 · 30 Sept 2026
Quarterly margins
Quarterly statements · USD
| Fiscal year | Q2 '25 | Q3 '25 | Q4 '25 | Q1 '26 | Q2 '26 | Q3 '26 | Q4 '26 | Q1 '27 |
|---|---|---|---|---|---|---|---|---|
| Revenue | 69.6 bn | 70.1 bn | 76.4 bn | 77.7 bn | 81.3 bn | 82.9 bn | 90.0 bn | 92.3 bn |
| Cost of revenue | 21.8 bn | 21.9 bn | 24.0 bn | 24.0 bn | 26.0 bn | 26.8 bn | 29.5 bn | 29.7 bn |
| Gross profit | 47.8 bn | 48.1 bn | 52.4 bn | 53.6 bn | 55.3 bn | 56.1 bn | 60.5 bn | 62.6 bn |
| Research & development | 7.9 bn | 8.2 bn | 8.8 bn | 8.1 bn | 8.5 bn | 8.9 bn | 10.0 bn | 9.0 bn |
| Operating income | 31.7 bn | 32.0 bn | 34.3 bn | 38.0 bn | 38.3 bn | 38.4 bn | 40.6 bn | 45.9 bn |
| Interest expense | 594.0 m | 594.0 m | 615.0 m | 698.0 m | 736.0 m | 778.0 m | 839.0 m | 870.0 m |
| Pre-tax income | 29.4 bn | 31.4 bn | 32.6 bn | 34.3 bn | 48.2 bn | 39.3 bn | 44.0 bn | 46.0 bn |
| Income tax | 5.3 bn | 5.6 bn | 5.4 bn | 6.6 bn | 9.8 bn | 7.6 bn | 8.3 bn | 9.3 bn |
| Net income | 24.1 bn | 25.8 bn | 27.2 bn | 27.7 bn | 38.5 bn | 31.8 bn | 35.8 bn | 36.6 bn |
| Diluted EPS | 3.23 | 3.46 | 3.65 ≈ | 3.72 | 5.16 | 4.27 | 4.81 ≈ | 4.92 |
| Operating cash flow | 22.3 bn | 37.0 bn | 42.6 bn | 45.1 bn | 35.8 bn | 46.7 bn | 55.4 bn | 58.0 bn |
| Capex | 15.8 bn | 16.7 bn | 17.1 bn | 19.4 bn | 29.9 bn | 30.9 bn | 35.8 bn | 39.4 bn |
| Dividends paid | 6.2 bn | 6.2 bn | 6.2 bn | 6.2 bn | 6.8 bn | 6.8 bn | 6.8 bn | 6.8 bn |
| Share repurchases | 5.0 bn | 4.8 bn | 4.5 bn | 5.7 bn | 7.4 bn | 4.6 bn | 4.6 bn | 4.4 bn |
≈ derived quarter (cumulative difference / share-days average)
E/P over time
E/P = trailing-12-month diluted EPS / price at quarter end. E/P is the inverse of P/E and stays defined when earnings are negative.
Today's P/E sits at the 39 percentile of its own 44-quarter history (min 20.8, median 31.4, max 48.9; quarters with earnings only).
Fiscal years
| Fiscal year | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 |
|---|---|---|---|---|---|---|---|---|
| Revenue | 125.8 bn | 143.0 bn | 168.1 bn | 198.3 bn | 211.9 bn | 245.1 bn | 281.7 bn | 331.8 bn |
| Revenue YoY | +14.0% | +13.6% | +17.5% | +18.0% | +6.9% | +15.7% | +14.9% | +17.8% |
| Net income | 39.2 bn | 44.3 bn | 61.3 bn | 72.7 bn | 72.4 bn | 88.1 bn | 101.8 bn | 133.7 bn |
| Net income YoY | +136.8% | +12.8% | +38.4% | +18.7% | −0.5% | +21.8% | +15.5% | +31.3% |
| Diluted EPS | 5.06 | 5.76 | 8.05 | 9.65 | 9.68 | 11.80 | 13.64 | 17.95 |
| Diluted EPS YoY | +137.6% | +13.8% | +39.8% | +19.9% | +0.3% | +21.9% | +15.6% | +31.6% |
| net % | 31.2% | 31.0% | 36.5% | 36.7% | 34.1% | 36.0% | 36.1% | 40.3% |
| Free cash flow | 38.3 bn | 45.2 bn | 56.1 bn | 65.1 bn | 59.5 bn | 74.1 bn | 71.6 bn | 67.0 bn |
Reported results vs expectations
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Balance sheet & financial health
Fiscal year 2026 · 30 Jun 2026
- Cash
- 20.9 bn USD
- Financial debt
- 40.3 bn USD
- Net debt
- 19.4 bn USD
- Equity
- 442.4 bn USD
- Total assets
- 758.4 bn USD
- Debt / equity
- 0.09x
- Current ratio
- 1.23x
- ROE
- 34.0%
- ROA
- 19.4%
- FCF margin
- 20.2%
Financial statements (source on every figure)
Revenue and net income (USD)
Margins
Income statement · USD
| Line | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Source (latest year) |
|---|---|---|---|---|---|---|---|
| Revenue | 168.1 bn | 198.3 bn | 211.9 bn | 245.1 bn | 281.7 bn | 331.8 bn | SEC (XBRL)· 29 Jul 2026verified |
| Cost of revenue | 52.2 bn | 62.7 bn | 65.9 bn | 74.1 bn | 87.8 bn | 106.4 bn | SEC (XBRL)· 29 Jul 2026verified |
| Gross profit | 115.9 bn | 135.6 bn | 146.1 bn | 171.0 bn | 193.9 bn | 225.5 bn | SEC (XBRL)· 29 Jul 2026verified |
| Research & development | 20.7 bn | 24.5 bn | 27.2 bn | 29.5 bn | 32.5 bn | 35.6 bn | SEC (XBRL)· 29 Jul 2026verified |
| Operating income | 69.9 bn | 83.4 bn | 88.5 bn | 109.4 bn | 128.5 bn | 155.2 bn | SEC (XBRL)· 29 Jul 2026verified |
| Interest expense | 2.3 bn | 2.1 bn | 2.0 bn | 2.9 bn | 2.4 bn | 3.1 bn | SEC (XBRL)· 29 Jul 2026verified |
| Pre-tax income | 71.1 bn | 83.7 bn | 89.3 bn | 107.8 bn | 123.6 bn | 165.9 bn | SEC (XBRL)· 29 Jul 2026verified |
| Income tax | 9.8 bn | 11.0 bn | 17.0 bn | 19.7 bn | 21.8 bn | 32.2 bn | SEC (XBRL)· 29 Jul 2026verified |
| Net income | 61.3 bn | 72.7 bn | 72.4 bn | 88.1 bn | 101.8 bn | 133.7 bn | SEC (XBRL)· 29 Jul 2026verified |
| Diluted EPS | 8.05 | 9.65 | 9.68 | 11.80 | 13.64 | 17.95 | SEC (XBRL)· 29 Jul 2026verified |
| Weighted average diluted shares | 7.6 bn | 7.5 bn | 7.5 bn | 7.5 bn | 7.5 bn | 7.5 bn | SEC (XBRL)· 29 Jul 2026verified |
| Dividend per share | 2.24 | 2.48 | 2.72 | 3.00 | 3.32 | 3.64 | SEC (XBRL)· 29 Jul 2026verified |
Balance sheet · USD
| Line | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Source (latest year) |
|---|---|---|---|---|---|---|---|
| Cash | 14.2 bn | 13.9 bn | 34.7 bn | 18.3 bn | 30.2 bn | 20.9 bn | SEC (XBRL)· 29 Jul 2026verified |
| Receivables | 38.0 bn | 44.3 bn | 48.7 bn | 56.9 bn | 69.9 bn | 80.9 bn | SEC (XBRL)· 29 Jul 2026verified |
| Inventories | 2.6 bn | 3.7 bn | 2.5 bn | 1.2 bn | 938.0 m | 1.4 bn | SEC (XBRL)· 29 Jul 2026verified |
| Current assets | 184.4 bn | 169.7 bn | 184.3 bn | 159.7 bn | 191.1 bn | 207.7 bn | SEC (XBRL)· 29 Jul 2026verified |
| Property, plant & equipment, net | 59.7 bn | 74.4 bn | 95.6 bn | 135.6 bn | 205.0 bn | 313.1 bn | SEC (XBRL)· 29 Jul 2026verified |
| Goodwill | 49.7 bn | 67.5 bn | 67.9 bn | 119.2 bn | 119.5 bn | 119.7 bn | SEC (XBRL)· 29 Jul 2026verified |
| Intangibles (excl. goodwill) | 7.8 bn | 11.3 bn | 9.4 bn | 27.6 bn | 22.6 bn | 18.6 bn | SEC (XBRL)· 29 Jul 2026verified |
| Total assets | 333.8 bn | 364.8 bn | 412.0 bn | 512.2 bn | 619.0 bn | 758.4 bn | SEC (XBRL)· 29 Jul 2026verified |
| Accounts payable | 15.2 bn | 19.0 bn | 18.1 bn | 22.0 bn | 27.7 bn | 42.4 bn | SEC (XBRL)· 29 Jul 2026verified |
| Short-term debt | 8.1 bn | 2.7 bn | 5.2 bn | 2.2 bn | 3.0 bn | 9.2 bn | SEC (XBRL)· 29 Jul 2026verified |
| Long-term debt | 50.1 bn | 47.0 bn | 42.0 bn | 42.7 bn | 40.2 bn | 31.1 bn | SEC (XBRL)· 29 Jul 2026verified |
| Current liabilities | 88.7 bn | 95.1 bn | 104.1 bn | 125.3 bn | 141.2 bn | 168.8 bn | SEC (XBRL)· 29 Jul 2026verified |
| Total liabilities | 191.8 bn | 198.3 bn | 205.8 bn | 243.7 bn | 275.5 bn | 316.0 bn | SEC (XBRL)· 29 Jul 2026verified |
| Equity | 142.0 bn † | 166.5 bn † | 206.2 bn † | 268.5 bn † | 343.5 bn † | 442.4 bn † | SEC (XBRL)· 29 Jul 2026verified |
† equity attributable to the parent's shareholders: in these years the issuer no longer reports the total including non-controlling interests.
Cash flow · USD
| Line | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Source (latest year) |
|---|---|---|---|---|---|---|---|
| Operating cash flow | 76.7 bn | 89.0 bn | 87.6 bn | 118.5 bn | 136.2 bn | 182.9 bn | SEC (XBRL)· 29 Jul 2026verified |
| Capex | 20.6 bn | 23.9 bn | 28.1 bn | 44.5 bn | 64.6 bn | 115.9 bn | SEC (XBRL)· 29 Jul 2026verified |
| Free cash flow | 56.1 bn ≈ | 65.1 bn ≈ | 59.5 bn ≈ | 74.1 bn ≈ | 71.6 bn ≈ | 67.0 bn ≈ | SEC (XBRL)· 29 Jul 2026derived |
| Investing cash flow | -27.6 bn | -30.3 bn | -22.7 bn | -97.0 bn | -72.6 bn | -139.5 bn | SEC (XBRL)· 29 Jul 2026verified |
| Financing cash flow | -48.5 bn | -58.9 bn | -43.9 bn | -37.8 bn | -51.7 bn | -52.5 bn | SEC (XBRL)· 29 Jul 2026verified |
| Dividends paid | 16.5 bn | 18.1 bn | 19.8 bn | 21.8 bn | 24.1 bn | 26.4 bn | SEC (XBRL)· 29 Jul 2026verified |
| Share repurchases | 27.4 bn | 32.7 bn | 22.2 bn | 17.3 bn | 18.4 bn | 22.3 bn | SEC (XBRL)· 29 Jul 2026verified |
≈ computed by olivLaw from the reported lines of the same year: Operating cash flow − Capex.
Computed indicators
Growth
Profitability
Returns
Balance sheet
Liquidity
Cash
Efficiency
Market and valuation
4 indicators that do not apply to the sector.
Valuation
olivLaw classification
Score: 51 / 100
A scoring methodology on indicators and valuation, not investment advice.
(margin_of_safety <= -0.25 & agreement in ['high', 'medium'])
Closing price
03 Nov 2026Source: olivLaw, closing series
Market cap: 3,869.0 bn USD
Key indicators
Coverage and freshness
Score by group
- Valuation20
- Returns54
- Quality79
- Balance sheet25
- Growth64
Estimated value range
The combined range = the median of the valid methods' low, central and high values; it is not a probability interval and does not cover every result. Envelope of all methods: 137.38 – 310.15 USD.
Valuation assumptions are editorial choices, not measured; beta is not measured.
Method ranges (USD per share)
— — Mid · ▏ Price
Valuation methods
- DCF (discounted cash flow)137.38 – 211.10 (Mid 166.11)WACC 9.3% · starting FCFF 62.5 bn USD · terminal value share of EV 74%The WACC × g sensitivity gives the method's bounds; these are not probabilities.Reverse DCF: no growth between −30% and +40% justifies the price
- Peers: EV/Sales204.77 – 310.15 (Mid 254.60)13 companies used · median multiple 5.5x · quartiles 4.4x – 6.7xADBE, ADSK, APPN, CRM, INTU, NABL, NOW, PTC, RBLX, SNPS, SSNC, TTWO, TWLO
- Peers: EV/EBITDAunavailable · input data missing
Classification (SIC) comparables group by industry code, not by economic activity; the direct group is an editorial selection by activity. Members' multiples are on their own trailing twelve months, at their own latest close.
Assumptions (illustrative, editorial)
- Risk-free rate
- 4.3%
- Equity risk premium
- 5.0%
- Beta (default)
- 1.00
- Cost of equity
- 9.3%
- Terminal growth
- 2.5%
Factor scorecard
Unattractive profile · Score 51/100
| Factor | Value | Score | Weight used |
|---|---|---|---|
| Gross margin · Quality | 67.7% | 69 (on a fixed band) | 11% |
| EBIT margin · Quality | 47.1% | 100 (vs peers) | 9% |
| FCF margin · Quality | 17.3% | 69 (on a fixed band) | 9% |
| Revenue CAGR 3Y · Growth | 16.1% | 64 (on a fixed band) | 18% |
| Revenue growth (YoY) · Growth | 17.8% | 62 (vs peers) | 9% |
| Net debt / EBITDA · Balance sheet | unavailable | unavailable | — |
| Current ratio · Balance sheet | 1.2x | 25 (on a fixed band) | 7% |
| EV/Sales · Valuation | 11.2x | 13 (vs peers) | 18% |
| FCF yield · Valuation | 1.5% | 31 (on a fixed band) | 14% |
| Shareholder yield (distributions) · Returns | 1.2% | 54 (on a fixed band) | 5% |
Factors without a value were dropped; the remaining weights were renormalised.
Score groups
- Balance sheet· partial25/100 · 1/2 factors with a value
- Growth64/100 · 2/2 factors with a value
- Quality79/100 · 3/3 factors with a value
- Returns54/100 · 1/1 factors with a value
- Valuation20/100 · 2/2 factors with a value
A «partial» group is computed from under half of its weight or from one factor: it is not a full assessment of the group.
Memo
MICROSOFT CORPORATION (MSFT). Latest full fiscal year: 2026; data up to 2026-09-30.
Figures computed from the financial statements: revenue 331.8 bn USD in 2026; YoY growth 17.8%; net margin 41.2%; ROE 34.2%.
The estimated value range is 171.08–260.62 USD per share (median of 2 methods, agreement: high); assumptions are illustrative. Against the central value of 210.36 USD, the price of 520.99 USD leaves a potential of -59.6% (value / price − 1) and a margin of safety of -147.7% (1 − price / value). The range is the median of the methods' low, central and high values, not a probability interval.
olivLaw score 51/100, methodological classification: unattractive profile (score, margin of safety and method agreement together; not a judgement of the right price). Groups assessed only in part: balance. Not investment advice.
Text generated deterministically from the figures shown; no language model. Not investment advice.
What supports the thesis
- EBIT margin: 47.1%
What contradicts it
- Current ratio: 1.2x
- EV/Sales: 11.2x
- The price is above the estimated value range
Not assessed (insufficient data or a ratio without meaning): Net debt / EBITDA.
Versus the vertical median
Services-Prepackaged Software (SIC 7372) · same industry (4-digit SIC) · compared with 39 companies
The size band was not applied: too few companies would have remained; the vertical includes much smaller or larger companies.
Multiples and returns vs the median
Price rebased to 100 (monthly, 5 years)
Companies in the vertical
| Market cap | P/E | ROE | Net margin | Revenue YoY | 1A / 3A | |
|---|---|---|---|---|---|---|
| MSFTMicrosoft Corporation | 3,869.0 bn | 27.2 | 34.2% | 41.2% | +17.8% | +1% / +48% |
| PLTRPalantir Technologies Inc. | 422.6 bn | 123.0 | 41.2% | 50.3% | +56.2% | +4% / +775% |
| ORCLOracle Corporation | 381.6 bn | 19.7 | 41.6% | 26.4% | +17.3% | −38% / +9% |
| CRWDCrowdStrike Holdings, Inc. | 250.5 bn | 1,137.5 | 1.3% | 1.1% | +21.7% | +92% / +313% |
| CRMSalesforce, Inc. | 182.9 bn | 20.3 | 19.4% | 22.0% | +9.6% | −4% / −12% |
| NOWServicenow, Inc. | 113.3 bn | 78.3 | 11.8% | 9.4% | +20.9% | −33% / −20% |
| SNOWSnowflake Inc. | 104.1 bn | — | -48.2% | -20.1% | +29.2% | +17% / +57% |
| ADBEAdobe Inc. | 95.8 bn | 13.7 | 61.9% | 28.0% | +10.5% | −23% / −60% |
| INTUIntuit Inc. | 92.1 bn | 20.9 | 23.6% | 21.3% | +13.9% | −46% / −40% |
| CDNSCadence Design Systems, Inc. | 88.8 bn | 64.3 | 22.9% | 22.5% | +14.1% | +4% / +18% |
| SNPSSynopsys Inc | 88.7 bn | 81.8 | 3.7% | 11.4% | +15.1% | +11% / −15% |
| ADSKAutodesk, Inc. | 52.7 bn | 32.7 | 53.9% | 21.1% | +17.5% | −17% / +16% |
| VEEVVeeva Systems Inc. | 49.1 bn | 49.6 | 14.4% | 29.3% | +16.3% | +26% / +74% |
| TTWOTake-Two Interactive Software, Inc. | 36.5 bn | — | -9.0% | -4.8% | +18.2% | −21% / +23% |
| TWLOTwilio Inc. | 33.1 bn | 26.9 | 14.9% | 21.8% | +13.7% | +65% / +231% |
| RBLXRoblox Corporation | 32.5 bn | — | -478.2% | -16.5% | +35.8% | −52% / +16% |
| MDBMongodb, Inc. | 27.0 bn | 458.7 | 2.0% | 2.1% | +22.8% | +1% / −19% |
| PTCPTC Inc. | 21.1 bn | 18.9 | 35.1% | 41.4% | +19.2% | +11% / +23% |
| SSNCSs&C Technologies Holdings, Inc. | 19.0 bn | 23.3 | 12.7% | 13.2% | +6.6% | −6% / +44% |
| UUnity Software Inc. | 17.8 bn | — | -18.9% | -29.0% | +2.0% | −5% / +37% |
| NTNXNutanix, Inc. | 17.5 bn | 12.5 | 37,460.2% | 52.8% | +12.4% | +35% / +50% |
| TYLTyler Technologies, Inc. | 16.1 bn | 50.9 | 10.5% | 13.5% | +9.1% | −14% / −1% |
| DOCUDocusign, Inc. | 15.0 bn | 49.0 | 17.8% | 9.8% | +8.2% | +16% / +86% |
| DTDynatrace, Inc. | 13.5 bn | 87.4 | 6.4% | 7.4% | +18.8% | +6% / −12% |
| GWREGuidewire Software, Inc. | 13.2 bn | 98.8 | 10.5% | 9.4% | +22.7% | −25% / +61% |
1- and 3-year price returns: for MSFT from daily closes (the same as the performance table), for the other companies from month-end closes.
olivLaw engine forecast
The world engine ran after the company's latest material disclosure. Probabilities are of TOUCHING a level within the horizon (not closing there) and sit next to the random walk (p_rw), the no-information benchmark.
Valuation scenarios (editable assumptions)
Illustrative scenarios
Illustrative: not forecasts and without probabilities. Each case is one coherent set of assumptions, computed on today's figures.
Estimated price (USD)
| Estimated price | Bear | Base | Bull |
|---|---|---|---|
| 1 years | 341.33 Total return -34% · Per year -34% | 600.70 Total return 16% · Per year 16% | 901.05 Total return 74% · Per year 74% |
| 3 years | 404.88 Total return -20% · Per year -7% | 794.42 Total return 55% · Per year 16% | 1,297.51 Total return 153% · Per year 36% |
| 5 years | 480.25 Total return -4% · Per year -1% | 1,050.62 Total return 107% · Per year 16% | 1,868.41 Total return 266% · Per year 30% |
- Exit P/E± 198.61
- Net margin± 139.02
- Annual revenue growth± 103.69
- Annual dilution± 11.68
AI analysis
AI-generatedAI-generated analysis (Claude) from cited public sources; it may contain errors. Not investment advice. As of 27 Oct 2026 · Model: claude-haiku-5-5.
Possibly outdated: the newest document it read is from 29 Jul 2026; since then the company filed 8-K (28 Oct 2026 · results), 10-Q (28 Oct 2026).
In brief
Microsoft is a technology company delivering cloud, AI, productivity software, business platforms, devices and online advertising. In fiscal 2026 revenue rose to $331.8 billion 1, and Microsoft Cloud revenue reached $214.4 billion 1, making the company a benchmark for AI adoption across the economy.
SWOT
Strengths
- The company has a broad customer base, an integrated portfolio spanning cloud, productivity and security, and sustained growth in cloud revenue 1. Datacenter scale and long-term customer commitments are clear advantages 1.
- The company points to a platform ecosystem that creates network effects among users and developers 1. This supports adoption of new products and reduces pressure to compete purely on price 1.
- Recurring subscription revenue and multi-year contracts provide visibility into demand and a high level of contractual commitment 1.
Weaknesses
- Investment in AI and infrastructure raises costs and can reduce gross margins, especially when AI usage grows faster than operating efficiency 1.
- XBOX and Windows OEM and Devices revenue declined, showing exposure to the PC market and consumer cycles 1.
- GAAP results are influenced by OpenAI investments, which can make direct year-on-year profitability comparisons harder 12.
Opportunities
- Expansion of AI into productivity products, Azure and software agents could open new revenue streams if adoption continues 1. If customers move toward managed AI services, the company could grow revenue per user 1.
- Growth markets and small and medium businesses offer room to reach new users 1. Security and compliance services could become a stronger advantage if demand for protection rises 1.
- Partnerships with technology and AI model providers could widen the offer, especially if integration proves effective for customers 1.
Threats
- Competition in AI is intense, and providers of open or free models could push prices down and pressure margins 1.
- Geopolitical risks, AI regulation and global trade policy could affect costs, supply chains and demand 1.
- If demand for AI infrastructure falls or grows more slowly than expected, assets could be impaired and investment returns could be lower 1.
Risks
- Intense competitionhigh
Competition comes from new business models, vertically integrated platforms and open-source vendors, which could reduce prices or volumes 1.
- Return on AI investmenthigh
Datacenter and computing investments are made at large scale and ahead of fully developed revenue, so returns could be delayed 1.
- Costs and availability of componentsmedium
Model training and inference costs, component prices and energy costs could rise, and some critical components have few qualified suppliers 1.
- Dependence on strategic partnersmedium
The relationship with OpenAI and other AI partners may change, and some partners are also competitors or major customers 1.
- Macroeconomic and trade factorsmedium
Global demand, exchange rates and trade policies, including tariffs, could affect the company's international results 1.
Investment thesis
What would need to be true (bull case)
- Rapid growth in cloud services, Azure and multi-year contracts could support higher revenue if AI adoption continues across the customer base 12.
- An integrated product portfolio, from productivity to security and developer platforms, could raise customer retention and ease competitive pressure 1.
- If infrastructure investment turns into real demand for AI services, datacenter economies of scale could improve long-term margins 1.
What would break the thesis
- High AI infrastructure costs could reduce margins if service prices fall under competitive pressure or if demand grows more slowly than expected 1.
- Declines in devices and gaming show exposure to consumer cycles and falling PC sales, which could limit total growth 1.
- GAAP results include the effects of OpenAI investments, which makes reported profit volatile and harder to compare with operating performance 12.
What to watch
- Gross margin trend of Microsoft Cloud and the effect of AI investment on costsQ1 2027
- Growth pace of Azure and AI services compared with company guidance2027
- Number of paid Microsoft 365 Copilot seats and monetisation per usernext 10-K
- Effect of OpenAI investments and the Anthropic gain on GAAP resultsQ1 2027
Products, market & competition
AI-generatedAI-generated analysis (Claude) from cited public sources; it may contain errors. Not investment advice. As of 27 Oct 2026 · Model: claude-haiku-5-5.
Possibly outdated: the newest document it read is from 29 Jul 2026; since then the company filed 8-K (28 Oct 2026 · results), 10-Q (28 Oct 2026).
The business
Microsoft describes its mission as empowering every person and every organization on the planet to achieve more 1. The company develops and supports a broad portfolio of solutions for individuals and businesses, focused on AI, cloud, productivity and collaboration, and personal computing 1. Operations are organized in three reportable segments: Productivity and Business Processes, Intelligent Cloud and More Personal Computing 1.
The revenue model combines cloud services, software licences, online advertising and device sales such as Surface and PC accessories 1. Major expenses relate to employees, operating and expanding datacenters for cloud services, designing and selling products, and income taxes 1. Revenue is generally higher in the fourth quarter because of multi-year contracts signed in that period 1.
The company cites a long-term strategic partnership with OpenAI, in which Microsoft is a major investor and holds rights to OpenAI's intellectual property for integration into its products 1. Investments in this partnership affect reported results, which is why the company presents non-GAAP figures that exclude their effect 2.
Segments
Market context
The markets for software, devices and cloud services are dynamic and highly competitive, and aggregate demand is correlated with global macroeconomic and geopolitical conditions 1. Demand for AI infrastructure is rising fast, and the company is expanding datacenters and server capacity 1. The AI market is described as highly competitive and rapidly evolving, with new entrants continually arriving 1.
International operations account for a significant share of total revenue and many revenues and expenses are denominated in currencies other than the US dollar, so exchange rate moves can change reported results 1. Shifts in global trade policy, including tariffs, can add supply chain pressure and cost volatility 1.
Trends
- Heavy investment in AI infrastructuremixed
The company invests significant resources in datacenters, computing capacity and energy, and these investments raise operating costs and could reduce margins if demand does not materialize 1. If adoption of AI services continues, these investments could support long-term cloud revenue growth 1.
- Adoption of Microsoft 365 Copilottailwind
Paid seats for Microsoft 365 Copilot passed 30 million in fiscal 2026, which points to strong interest from enterprise customers 2. Monetisation remains an open question, since pricing could decline under competitive pressure 1.
- Pressure on PCs and gamingheadwind
Windows OEM and Devices revenue declined in fiscal 2026, and XBOX content and services revenue also fell 1. If the PC market stays weak, this category could continue to limit total growth 1.
- Effect of OpenAI investments on resultsmixed
GAAP results include gains or losses from investments in OpenAI, so reported profit can fluctuate from one period to the next 1. The company also presents adjusted figures to clarify operating trends 2.
Competitive position
The company faces competition from global software vendors, web and mobile application companies, AI-first firms and local developers 1. In cloud and AI, competitors include hyperscalers, frontier model providers and open-source alternatives 1.
In consumer and device markets, competition comes from vertically integrated platforms, smartphone and tablet makers and gaming platforms 1. Business models based on free software or advertising can compress margins across several categories 1.
- Amazon Web ServicesAMZN
Cloud and AI services provider competing with Azure, described in the source among hyperscalers 1.
- AlphabetGOOGL
Company with cloud, AI and advertising products that overlap with several Microsoft services 1.
- AppleAAPL
Provider of vertically integrated devices and services, a competitor in consumer platforms 1.
- Open-source software and open model providers
Projects and companies that distribute open software or open AI models and compete on very low prices 1.
Links, dependencies and risks
Who the company is tied to, from its own SEC filings (customers, suppliers, production, partners, competitors, countries, regulation), from the 5 %+ holders' statements (13D/13G) and from what other companies say about it. Click a node for its evidence; on a listed company the graph moves to it.
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News & filings
In the press
- Microsoft and Amazon combine for a $400 billion market-cap boost — and these factors show whyMarketWatch — Top Stories · 04 Nov 2026 · EN
- Hyperscalers and Apple surge after election results remove investor uncertaintyCNBC — Top News · 04 Nov 2026 · EN
- US data-center stocks tumble, clean-energy shares rally after Democratic midterm sweepAnadolu Agency (TR, EN) · 04 Nov 2026 · EN
- Xbox previews two new ways to control cloud gamesThe Verge · 04 Nov 2026 · EN
- Why a company donating $20,000 a month counts for more than $240,000 once a year in the eyes of customersPhys.org · 04 Nov 2026 · EN
- My favorite 25W wireless power bank is down to $35The Verge · 04 Nov 2026 · EN
- Schools That Say No to Google’s AI Will Be Saying Goodbye to its Search TooIt's FOSS · 04 Nov 2026 · EN
- The fight for tech accountability starts nowThe Verge · 04 Nov 2026 · EN
- HP Inc hires former GSK boss as CEOThe Register · 04 Nov 2026 · EN
- Local AI Weekly #8: All Your RAM Are Belong to UsIt's FOSS · 04 Nov 2026 · EN
- Watchdog sticks probe into Capita's handling of 1.7 million member civil service pension schemeThe Register · 04 Nov 2026 · EN
- Midterm elections deliver a ‘blue wave.’ The stock market sees green.MarketWatch — Top Stories · 04 Nov 2026 · EN
- Microsoft "minor contract" loss, says Nscale key investorTech.eu · 04 Nov 2026 · EN
- Acțiunile companiilor de inteligență artificială au scăzut vertiginos în urma rezultatelor alegerilor de la jumătatea mandatului din SUA. - Vietnam.vnSurge — Google News · 04 Nov 2026 · RO
- Google oferă pachete de plecare voluntară angajaților din mai multe țări, pe fondul investițiilor masive în inteligența artificialăMediafax · 04 Nov 2026 · RO
- Windows pushed AI PCs, but now it's hit a wall of RAM pricesThe Register · 04 Nov 2026 · EN
- Microsoft's AI PC push meets a wall of RAM prices, but Redmond is still beating the drumThe Register · 04 Nov 2026 · EN
- STATION F startups raise record €2B as campus unveils 2026 Future 40Tech.eu · 04 Nov 2026 · EN
- Microsoft improves Windows 11 performance on 8 GB PCs as RAM prices keep climbingThe Register · 03 Nov 2026 · EN
- Ireland fact of the dayMarginal Revolution · 03 Nov 2026 · EN
SEC filings
- Current report04 Nov 2026Other events · Financial statements and exhibits
- Current report28 Oct 2026Other events · Financial statements and exhibits
- Quarterly report28 Oct 2026
- Current report28 Oct 2026Results of operations · Financial statements and exhibits
- Proxy statement21 Oct 2026
- Current report02 Sept 2026Regulation FD disclosure · Financial statements and exhibits
- Annual report29 Jul 2026
- Current report29 Jul 2026Results of operations · Financial statements and exhibits
- Current report05 Jun 2026Departure or appointment of officers
- Current report14 May 2026Departure or appointment of officers · Financial statements and exhibits
Sources
- [1] Form 10-K, fiscal year ended 2026-06-30 · SEC / Microsoft Corp. · 29 Jul 2026
- [2] Form 8-K, results release (exhibit 99.1) · SEC / Microsoft Corp. · 29 Jul 2026
Figures computed by olivLaw from SEC filings and closing prices; the qualitative analysis is AI-generated from cited sources. Not investment advice.