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Microsoft (MSFT - Free Report) is a Zacks Rank #2 (Buy) that has a D for Value and a B for Growth. As one of the worlds largest software company’s, most investor know this stock for its Office suite of software. There is a new driver on the horizon for this company and it is all about AI. Microsoft 365 Copilot has been singled out in recent earnings conference calls as an emerging winner and that could reshape the AI space . Let’s explore more about why this stock is the Bull of the Day.
Description
Microsoft Corp. engages in the development and support of software, services, devices, and solutions. It operates through the following segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The Productivity and Business Processes segment is composed of products and services relating to productivity, communication, and information services such as Office Commercial, Office Consumer, LinkedIn, and Dynamics business solutions. The Intelligent Cloud segment consists of public, private, and hybrid server products and cloud services for businesses and developers, as well as enterprise and partner services. The More Personal Computing segment refers to products and services including Windows operating system, Windows cloud services, Surface, HoloLens, personal computer accessories, Xbox hardware, Xbox Cloud Gaming, Microsoft News, and Microsoft Edge. The company was founded by Paul Gardner Allen and William Henry Gates, III in 1975 and is headquartered in Redmond, WA.
AI Integration
Back in December MSFT was said to be working on integrating internal and third party AI models to work with its Microsoft 365 Copilot. This comes after MSFT has invested over $13B in OpenAi which recently scrapped its plans to switch from a not for profit to a for profit company. Now the AI bellwether is looking to MSFT for help to change its non profit status. As a major investor in OpenAI, MSFT has the ability to be a key player in the future of the company and will likely strike a deal that will be very beneficial to Microsoft shareholders.
Earnings History
When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
Microsoft (MSFT - Free Report) has posted four consecutive beats of the Zacks Consensus Estimate. The takeaway from the earnings history is that the company has an average positive earnings surprise of 5.2% over the last year.
The most recent earnings print saw the company post $3.46 when the consensus was at $3.20. That 26 cent beat translates into a positive earnings surprise of 8.13%.
Earnings Estimates Revisions
Earnings estimate revisions is what the Zacks Rank is all about.
Estimates are moving higher for Microsoft (MSFT - Free Report) .
This quarter has moved to $3.35, up from $3.32 over the last 60 days.
Next quarter has seen a smaller increase, moving from $3.52 to $3.53 over the same time period.
The full year 2025 has seen a big move, going from $13.07 to $13.30 over the last 60 days.
2026 saw a move higher as well, going from $14.71 to $14.86 over the same period.
Growth
I see revenue in 2025 will come in around $278B which will end up being growth of about 13.6%.
Next year analysts are calling for sales of just over $313B which would be good for growth of 12.4%.
The most recent quarter saw topline growth of 13.3%, so those revenue estimates might turn out to be a little light.
Valuation
The forward PE of 33x is a little rich, but one has to include the $13B investment the company has in OpenAI. Price to book of 10x is high for most stocks, but MSFT is an asset slim business, so a higher price to book multiple should be expected. Price to sales at 12x could prove to be rather low if the company continues to post solid revenue growth.
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Bull Of The Day: Microsoft (MSFT)
Microsoft (MSFT - Free Report) is a Zacks Rank #2 (Buy) that has a D for Value and a B for Growth. As one of the worlds largest software company’s, most investor know this stock for its Office suite of software. There is a new driver on the horizon for this company and it is all about AI. Microsoft 365 Copilot has been singled out in recent earnings conference calls as an emerging winner and that could reshape the AI space . Let’s explore more about why this stock is the Bull of the Day.
Description
Microsoft Corp. engages in the development and support of software, services, devices, and solutions. It operates through the following segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The Productivity and Business Processes segment is composed of products and services relating to productivity, communication, and information services such as Office Commercial, Office Consumer, LinkedIn, and Dynamics business solutions. The Intelligent Cloud segment consists of public, private, and hybrid server products and cloud services for businesses and developers, as well as enterprise and partner services. The More Personal Computing segment refers to products and services including Windows operating system, Windows cloud services, Surface, HoloLens, personal computer accessories, Xbox hardware, Xbox Cloud Gaming, Microsoft News, and Microsoft Edge. The company was founded by Paul Gardner Allen and William Henry Gates, III in 1975 and is headquartered in Redmond, WA.
AI Integration
Back in December MSFT was said to be working on integrating internal and third party AI models to work with its Microsoft 365 Copilot. This comes after MSFT has invested over $13B in OpenAi which recently scrapped its plans to switch from a not for profit to a for profit company. Now the AI bellwether is looking to MSFT for help to change its non profit status. As a major investor in OpenAI, MSFT has the ability to be a key player in the future of the company and will likely strike a deal that will be very beneficial to Microsoft shareholders.
Earnings History
When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
Microsoft (MSFT - Free Report) has posted four consecutive beats of the Zacks Consensus Estimate. The takeaway from the earnings history is that the company has an average positive earnings surprise of 5.2% over the last year.
The most recent earnings print saw the company post $3.46 when the consensus was at $3.20. That 26 cent beat translates into a positive earnings surprise of 8.13%.
Earnings Estimates Revisions
Earnings estimate revisions is what the Zacks Rank is all about.
Estimates are moving higher for Microsoft (MSFT - Free Report) .
This quarter has moved to $3.35, up from $3.32 over the last 60 days.
Next quarter has seen a smaller increase, moving from $3.52 to $3.53 over the same time period.
The full year 2025 has seen a big move, going from $13.07 to $13.30 over the last 60 days.
2026 saw a move higher as well, going from $14.71 to $14.86 over the same period.
Growth
I see revenue in 2025 will come in around $278B which will end up being growth of about 13.6%.
Next year analysts are calling for sales of just over $313B which would be good for growth of 12.4%.
The most recent quarter saw topline growth of 13.3%, so those revenue estimates might turn out to be a little light.
Valuation
The forward PE of 33x is a little rich, but one has to include the $13B investment the company has in OpenAI. Price to book of 10x is high for most stocks, but MSFT is an asset slim business, so a higher price to book multiple should be expected. Price to sales at 12x could prove to be rather low if the company continues to post solid revenue growth.