Microsoft (MSFT) is the worst Dow Jones stock Thursday after the tech giant beat top- and bottom-line expectations for its fiscal 2025 first quarter but issued an outlook for its second quarter that failed to impress Wall Street.
In the three months ended September 30, Microsoft's revenue increased 16% year over year to $65.6 billion, boosted by 22% growth in Microsoft Cloud revenue to $38.9 billion. Meanwhile, its earnings per share (EPS) rose 10.4% from the year-ago period to $3.30.
"Artificial intelligence-driven transformation is changing work, work artifacts, and workflow across every role, function, and business process," said Microsoft CEO Satya Nadella in a statement. "We are expanding our opportunity and winning new customers as we help them apply our AI platforms and tools to drive new growth and operating leverage."
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.
Microsoft's results came in ahead of analysts' expectations. Wall Street was anticipating revenue of $64.5 billion and earnings of $3.10 per share, according to CNBC.
However, sentiment turned negative toward Microsoft when it provided its second-quarter outlook for the fiscal year. Specifically, MSFT said it expects revenue in the range of $68.1 billion to $69.1 billion, which came up short of the $69.8 billion in revenue analysts are guiding for.
Is Microsoft stock a buy, sell or hold?
Microsoft has lagged the broader market in recent months and is now up 15% for the year to date on a total return basis (price change plus dividends). This compares to the S&P 500's 23% gain. But Wall Street's all-in on the blue chip stock for the long haul, and for good reason considering MSFT's impressive 20-year return.
According to S&P Global Market Intelligence, the average analyst target price for MSFT stock is $501.99, representing implied upside of more than 20% to current levels. Additionally, the consensus recommendation is Strong Buy.
Financial services firm Wedbush is one of the most bullish outfits on MSFT stock with a Buy rating and $550 price target.
"In a nutshell, we come away from this quarter more bullish (not less) after seeing this AI growth and Copilot monetization play out in real time for Microsoft," says Wedbush analyst Daniel Ives. "The bears will try to split hairs on any number but ultimately this is a tech stalwart in major growth mode... and we see no signs of slowing down based on our checks and these impressive results and outlook that give us any pause in our bullish thesis."
Ives adds that "we would be strong buyers of MSFT" following this post-earnings weakness.
Related Content
- Meta Stock Slips as Facebook Parent Ramps Up AI Spending
- Earnings Calendar and Analysis for This Week
- Analysts' Top S&P 500 Stocks to Buy Now
-
Trump's Immigration Policies and the Price of Home Healthcare: First 100 DaysPresident Trump's immigration policies may wallop your pocketbook if you rely on a home healthcare aide.
-
Stock Market Today: Stocks Extend a Quiet Winning StreakThe S&P 500 Index could actually close April with a monthly gain, which would be an extraordinary sign of market resilience.
-
Stock Market Today: Stocks Extend a Quiet Winning Streak
The S&P 500 Index could actually close April with a monthly gain, which would be an extraordinary sign of market resilience.
-
How Trump's First 100 Days Have Impacted Your PortfolioPresident Trump's first 100 days in office have been busy, with a flurry of executive orders sparking volatility in the stock and bond markets.
-
Is It Still Worth It to Gift Savings Bonds?Kiplinger editor explores if it's still a good idea to get savings bonds as gifts for children, looking at their returns and usability.
-
Don't Veer Off Course at the First Sign of a Squall in the MarketsWhen markets go nuts and investor sentiment drops, you can keep your sanity by trusting in and sticking with your long-term plan.
-
How Business Owners Can Prepare for a Terminal DiagnosisThe most important thing is readiness, whether the owner faces a life-changing diagnosis or an employee does.
-
Advisers, Take Note: How 2025 Social Security Changes May Impact Your ClientsWhat financial advisers might need to know to help their clients navigate Social Security in 2025.
-
Stock Market Today: Have We Seen the Bottom for Stocks?Solid first-quarter earnings suggest fundamentals remain solid, and recent price action is encouraging too.
-
Social Security Is Taxable, But There Are WorkaroundsIf you're strategic about your retirement account withdrawals, you can potentially minimize the taxes you'll pay on your Social Security benefits.
