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Microsoft (MSFT) Laps the Stock Market: Here's Why

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In the latest close session, Microsoft (MSFT - Free Report) was up +1.2% at $511.70. This change outpaced the S&P 500's 0.54% gain on the day. At the same time, the Dow added 0.52%, and the tech-heavy Nasdaq gained 0.74%.

Shares of the software maker witnessed a gain of 5.28% over the previous month, trailing the performance of the Computer and Technology sector with its gain of 5.77%, and outperforming the S&P 500's gain of 4.2%.

Analysts and investors alike will be keeping a close eye on the performance of Microsoft in its upcoming earnings disclosure. The company's earnings report is set to go public on July 30, 2025. On that day, Microsoft is projected to report earnings of $3.35 per share, which would represent year-over-year growth of 13.56%. In the meantime, our current consensus estimate forecasts the revenue to be $73.71 billion, indicating a 13.88% growth compared to the corresponding quarter of the prior year.

For the full year, the Zacks Consensus Estimates are projecting earnings of $13.34 per share and revenue of $279.09 billion, which would represent changes of +13.05% and 0%, respectively, from the prior year.

Investors should also pay attention to any latest changes in analyst estimates for Microsoft. These revisions typically reflect the latest short-term business trends, which can change frequently. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.03% higher within the past month. Microsoft is holding a Zacks Rank of #2 (Buy) right now.

Digging into valuation, Microsoft currently has a Forward P/E ratio of 33.9. This valuation marks a premium compared to its industry average Forward P/E of 26.54.

Investors should also note that MSFT has a PEG ratio of 2.3 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MSFT's industry had an average PEG ratio of 2.37 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 33, placing it within the top 14% of over 250 industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.


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