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Microsoft’s Growth Driven by Cloud Services
Microsoft (NASDAQ: MSFT) reported a 21% year-over-year revenue increase in its Intelligent Cloud division, which includes Azure, for Q3 FY 2025, ending March 31. Azure revenue specifically rose by 33%. The total revenue for Microsoft in Q3 FY 2025 was up 13%, with diluted earnings per share increasing by 18%. Despite this growth, Microsoft’s stock trades at a forward P/E of 33.3, a premium compared to the S&P 500’s average of 23.7.
Market Position and Competitors
Azure is positioning itself as a leading cloud platform, exceeding Google Cloud and closely approaching Amazon Web Services (AWS), which is currently experiencing slower growth. However, Microsoft’s diluted EPS growth is lower than competitors like Nvidia and Meta Platforms, raising questions about whether Microsoft is the top AI stock to buy now.
Investor Considerations
Analysts suggest that while Microsoft remains a strong player in AI, there may be better investment opportunities available at present, with the advisory team highlighting 10 preferable stocks.
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