Is Microsoft Stock Still a Buy After Earnings?

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.

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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."

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