Is Microsoft Stock Still a Buy After Earnings?
Microsoft is lower after the tech giant's soft cloud growth and revenue guidance, but analysts still love the Dow stock. Here's what you need to know.
Microsoft (MSFT) stock is in negative territory early Wednesday after the tech giant disclosed its fiscal fourth-quarter earnings report. The results beat top- and bottom-line estimates, but the company's outlook fell short of expectations.
In the three months ended June 30, Microsoft's revenue increased 15% year-over-year to $64.7 billion, due in part to 29% growth in Azure and other cloud services. Its earnings per share (EPS) rose 9.7% from the year-ago period to $2.95.
"In our largest quarter of the year, we again delivered double-digit top and bottom-line growth with continued share gains across many of our businesses and record commitments to our Microsoft Cloud platform," Microsoft Chief Financial Officer Amy Hood said in a statement.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Wall Street was anticipating revenue of $64.4 billion for Microsoft's fiscal Q4 and earnings of $2.93 per share, according to CNBC.
However, sentiment turned negative toward Microsoft for two reasons. One is that its year-over-year revenue growth fell short of the 31% increase Wall Street was expecting. Additionally, the company's revenue outlook of $63.8 billion to $64.8 billion for its fiscal 2025 first quarter is below the $65.2 billion estimate from analysts. MSFT added that it anticipates full-year revenue growth in the double-digits.
Is Microsoft stock a buy, sell or hold?
Wall Street is bullish on the Dow Jones stock, and for good reason. Indeed, shares are up more than 23% in the past 12 months. What's more, MSFT has been one of the best buy-and-hold bets for long-term investors.
According to S&P Global Market Intelligence, the average analyst target price for MSFT stock is $498.07, representing an upside of roughly 20% to current levels. Plus, the consensus recommendation is Strong Buy.
Financial services firm Oppenheimer is one of the more bullish outfits on the blue chip stock with a Buy rating and $500 price target.
Microsoft is "one of the world's leading platform tech companies, with large franchises in Cloud (Azure), business productivity (Office), personal computing (1.4 billion Windows users), gaming (Xbox), and communications (Teams)," says Oppenheimer analyst Timothy Horan. "Now, artificial intelligence (AI) is improving all the above."
Horan adds that the cloud industry remains only 30% penetrated, even as it grows 20% each year. And MSFT "is especially well positioned for enterprise AI adoption" in the cloud space "due to its large entrenched customer base and infrastructure."
Related Content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.
-
Need More Money for Retirement? You May Have Already Saved It.
Over 29 million lost 401(k) accounts worth almost $1.65 trillion have been forgotten by their owners. Here are eight ways you can locate your account.
By Donna LeValley Published
-
Five Ways to Save for Retirement in 2025
If you did a poor job saving for retirement last year, don't despair. There are ways to build your nest egg in the new year.
By Donna Fuscaldo Published
-
The Wrong Money Question to Ask After Trump's Election
If you're wondering what moves to make with a new president moving into the White House, you're being dangerously shortsighted. Here's what to do instead.
By George Pikounis Published
-
An Investing Plan for This Year: Doing Less Can Lead to More
Achieve more when investing in 2025 by planning to work smarter, not harder. These three strategies can help put you on the right track and keep you there.
By David Booth Published
-
All About Six Types of Auto Insurance Coverage
Do you know what your auto insurance policy covers? Here's a primer on some coverage categories, along with examples of how each type of coverage works.
By Karl Susman, CPCU, LUTCF, CIC, CSFP, CFS, CPIA, AAI-M, PLCS Published
-
The Cheapest Places To Retire in the US
When you're trying to balance a fixed income with an enjoyable retirement, cost of living is a crucial factor to consider.
By Stacy Rapacon Published
-
The Best Bank ETFs to Buy
The best bank ETFs can offer above-average yields and reduce the complexities of investing in financial stocks.
By Tony Dong, MSc Published
-
Social Security and Medicare Funding: Is the Sky Falling?
Social Security and Medicare are slowly running out of money, but what does that mean for the retirees counting on them? Actually, it's not all bad news.
By Jared Elson, Investment Adviser Published
-
What We Need to Do to Protect Retirees' Financial Security
Cognitive decline and aging in general put older retirees at risk of losing their financial security when they're the most vulnerable. What can be done?
By Margaret Franklin, CFA Published
-
Stock Market Today: Stocks End Mixed After FOMC Minutes
The minutes from the December Fed meeting signaled central bankers' uncertainty over potential Trump administration policies.
By Karee Venema Published