Microsoft’s Mixed Performance Amid Strong Earnings Growth

Redmond, Washington-based Microsoft Corporation (MSFT), one of the largest diversified technology companies globally, boasts a market cap of $2.9 trillion. Its offerings range from operating systems to cross-device productivity applications, server solutions, management tools, and video games.

Stock Performance Overview

Over the past 52 weeks, Microsoft’s stock has underperformed compared to the broader market. MSFT has seen a modest gain of 1.5%, while the S&P 500 Index ($SPX) has increased by 10.6%. Year-to-date (YTD), MSFT is down 6.2%, slightly more than SPX’s decline of 5.3%.

Focusing more narrowly, Microsoft’s stock has lagged behind the Technology Select Sector SPDR Fund (XLK), which has risen by 7% over the last year. However, on a YTD basis, Microsoft has outperformed XLK, which is down 9.7%.

Recent Earnings Report

On April 30, Microsoft released strong third-quarter earnings. Revenue rose by 13.3% year-over-year to $70.1 billion, surpassing analyst expectations by 2.5%. This performance was bolstered by growth across all segments, with the Intelligent Cloud division leading at a 20.8% revenue increase. Operating income also rose by 16% to $32 billion, resulting in a net income per share increase of 17.7% year-over-year, reaching $3.46. This EPS figure exceeded Wall Street estimates by 8.1%.

Future Expectations

For the current fiscal year ending in June, analysts project MSFT’s EPS to grow 10.4% year over year to $13.03. The company has a solid track record, having exceeded consensus estimates in each of the last four quarters.

Analyst Ratings

A consensus rating from 45 analysts covering MSFT is a “Strong Buy,” supported by 37 “Strong Buy,” four “Moderate Buy,” and four “Hold” ratings. This reflects a slight decrease in bullish sentiment compared to a month ago, when 38 analysts rated it as a “Strong Buy.”

On May 1, Piper Sandler Companies (PIPR) reaffirmed an “Overweight” rating for MSFT and increased its price target to $475, indicating a potential upside of 20.2% from current levels. The average price target is $490.75, suggesting a significant 24.2% upside. The highest price target of $600 hints at an ambitious upside of 51.8%.

On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information in this article is solely for informational purposes. Please view the Barchart Disclosure Policy for more details.

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.