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XBRL · SEC EDGAR2008–2025(18yr)| Metric | FY 2008 | FY 2009 | FY 2010 | FY 2011 | FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | FY 2025Latest | YoY |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $60.4B | $58.4B | $62.5B | $69.9B | $73.7B | $77.8B | $86.8B | $93.6B | $91.2B | $96.6B | $110.4B | $125.8B | $143.0B | $168.1B | $198.3B | $211.9B | $245.1B | $281.7B | +14.9% |
| Gross Profit | $48.8B | $46.3B | $50.1B | $54.4B | $56.2B | $57.6B | $59.9B | $60.5B | $52.5B | $55.7B | $72.0B | $82.9B | $96.9B | $115.9B | $135.6B | $146.1B | $171.0B | $193.9B | +13.4% |
| Gross Margin | 80.8% | 79.2% | 80.2% | 77.7% | 76.2% | 74.0% | 69.0% | 64.7% | 57.6% | 57.7% | 65.2% | 65.9% | 67.8% | 68.9% | 68.4% | 68.9% | 69.8% | 68.8% | -0.9pp |
| Operating Income | $22.3B | $20.4B | $24.1B | $27.2B | $21.8B | $26.8B | $27.8B | $18.2B | $20.2B | $22.3B | $35.1B | $43.0B | $53.0B | $69.9B | $83.4B | $88.5B | $109.4B | $128.5B | +17.4% |
| Operating Margin | 36.9% | 34.8% | 38.6% | 38.8% | 29.5% | 34.4% | 32.0% | 19.4% | 22.1% | 23.1% | 31.8% | 34.1% | 37.0% | 41.6% | 42.1% | 41.8% | 44.6% | 45.6% | +1.0pp |
| Net Income | $17.7B | $14.6B | $18.8B | $23.1B | $17.0B | $21.9B | $22.1B | $12.2B | $16.8B | $21.2B | $16.6B | $39.2B | $44.3B | $61.3B | $72.7B | $72.4B | $88.1B | $101.8B | +15.5% |
| Net Margin | 29.3% | 24.9% | 30.0% | 33.1% | 23.0% | 28.1% | 25.4% | 13.0% | 18.4% | 22.0% | 15.0% | 31.2% | 31.0% | 36.5% | 36.7% | 34.1% | 36.0% | 36.1% | +0.2pp |
| Free Cash Flow | $18.4B | $15.9B | $22.1B | $24.6B | $29.3B | $24.6B | — | — | $25.0B | $31.4B | $32.3B | $38.3B | $45.2B | $56.1B | $65.1B | $59.5B | $74.1B | $71.6B | -3.3% |
| FCF Margin | 30.5% | 27.2% | 35.4% | 35.2% | 39.8% | 31.6% | — | — | 27.4% | 32.5% | 29.2% | 30.4% | 31.6% | 33.4% | 32.9% | 28.1% | 30.2% | 25.4% | -4.8pp |
| EPS (Diluted) | $1.87 | $1.62 | $2.10 | $2.69 | $2.00 | $2.58 | $2.63 | $1.48 | $2.10 | $2.71 | $2.13 | $5.06 | $5.76 | $8.05 | $9.65 | $9.68 | $11.80 | $13.64 | +15.6% |
1. THE BIG PICTURE
Microsoft is no longer just a software vendor; it has become an integrated AI utility. By tethering its legacy productivity tools to a massive, proprietary cloud infrastructure, it has created a closed loop where AI services drive cloud consumption, which in turn funds the next generation of silicon and datacenters.
2. WHERE THE RISKS HIT HARDEST
The "Cloud Scale" advantage is threatened by "Cloud and AI Execution" risks because the economies of scale Microsoft touts (10-K Item 1) require massive upfront costs for GPUs and custom silicon that may not immediately align with revenue growth (Risks). Furthermore, the "Integrated Security" differentiator is undermined by recent "Cybersecurity" failures, specifically the late 2023 nation-state attack that compromised source code and email accounts (Risks). This creates a credibility gap: Microsoft positions its end-to-end security as a reason to choose its ecosystem, yet its own infrastructure has proven vulnerable to sophisticated actors.
3. WHAT THE NUMBERS SAY TOGETHER
Microsoft’s 46.8% operating margin is elite, ranking second among its peers, yet its 19.5% FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin ranks fourth, trailing both Nvidia and Apple (XBRL). This gap reveals that while the business is highly profitable on paper, it is consuming vast amounts of cash to build the "intelligent edge" platform. Revenue growth of 17% in the most recent quarter exceeds the TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter average of 14.9%, fueled by a 39% surge in Azure (8-K). However, the "More Personal Computing" segment’s 3% decline highlights a structural shift: Microsoft is shedding its reliance on consumer hardware and Windows OEM cycles to become a pure-play enterprise cloud engine. Short interest is negligible at 0.8% of float, suggesting broad institutional confidence in this transition.
4. IS IT WORTH IT AT THIS PRICE?
At 21.5x Forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations, Microsoft trades at a 6% discount to the peer median of 22.9x (XBRL). At this multiple, the market is pricing in ~5.9% long-term growth (CAPM analysis). Given that earnings recently grew 60% and revenue is expanding at 17%, this expectation appears modest. However, the discount is likely a reflection of the $28.9 billion IRS tax liability (Risks) and a buyback yield of 0.8% that is the lowest among its peer group. Investors are paying for AI leadership but are being compensated with the highest dividend yield (0.9%) in the set. If growth were to slow to 5%, the justified multiple would fall to 17.9x, representing roughly 17% downside.
5. WHAT WOULD CHANGE THIS VIEW?
- Cautious if the "More Personal Computing" segment decline accelerates beyond 3%, indicating that legacy hardware and Windows licensing are becoming a permanent drag on the high-growth cloud business.
- Constructive if the IRS audit for 2004–2013 is resolved for significantly less than the $28.9 billion sought, removing a major capital overhang.
- Cautious if FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin continues to lag operating margin, signaling that the high costs of GPUs and datacenter components are a structural shift in the business model rather than a temporary investment phase.
6. BOTTOM LINE
Structural Advantage: High switching costs within the Microsoft 365 ecosystem combined with a cost-per-unit advantage in global datacenter deployment.
Bottom Line: Microsoft is the most reasonably priced way to own the AI infrastructure layer, provided one accepts the heavy capital intensity required to stay there.
1. Top 5 Material Risks
- Intense Market Competition: Microsoft competes against both diversified global firms and specialized companies. Low barriers to entry and rapid technological shifts mean that failure to innovate could adversely affect Microsoft's financial condition and results of operations.
- Platform-Based Ecosystem Risks: Microsoft’s business model relies on creating ecosystems with network effects. Competing vertically-integrated models—where a single firm controls hardware, software, and services—can increase Microsoft's cost of revenue and reduce operating margins if Microsoft shifts its own business toward this model.
- Cloud and AI Execution: Microsoft is incurring significant costs to build and maintain infrastructure for cloud and AI services. Success depends on generating increasing traffic and market share; failure to do so could result in revenue growth that does not align with these heavy infrastructure investments.
- Cybersecurity and Data Privacy: Microsoft has experienced unauthorized access to its systems, including a nation-state attack in late 2023 that compromised email accounts and source code repositories. Such incidents can lead to reputational harm, loss of revenue, and increased costs for remediation and security enhancements.
- Tax Liabilities: Microsoft is subject to ongoing audits, most notably by the IRS for tax years 2004–2013 regarding intercompany transfer pricing. The IRS is seeking $28.9 billion in additional payments, which could significantly impact results of operations if resolved unfavorably.
2. Company-Specific Risks
- Activision Blizzard Integration: The acquisition of Activision Blizzard involves risks related to integrating new employees, business systems, and technology, as well as the potential for unsatisfactory returns on investment.
- OpenAI Strategic Partnership: The third phase of the OpenAI partnership, announced in January 2023, carries risks that the arrangement may not advance business strategy or that Microsoft may have limited ability to influence the partner.
- Source Code Exposure: Because source code is critical to Microsoft’s business, any leak or unauthorized disclosure could result in the loss of trade secret protection, making it easier for third parties to copy functionality.
- Dependency on OEM Partners: Some Microsoft devices compete directly with products made by its own OEM partners, which may negatively affect those partners' commitment to the Microsoft platform.
3. Regulatory/Legal Risks
- Competition Law: Government agencies in the U.S., EU, UK, and China are actively enforcing and enacting new regulations in digital markets. These actions may result in fines or hinder Microsoft's ability to provide software benefits, reducing product attractiveness and revenue.
- AI Regulation: Emerging global legislation, such as the EU’s AI Act, may increase costs or restrict the provision and operation of Microsoft’s AI models and services.
- Trade and Export Controls: U.S. export controls, such as the AI Diffusion Rule, restrict Microsoft from offering products to certain entities. Geopolitical instability and shifting trade policies create uncertainty in the continuity of products and could increase operational costs.
- Environmental Regulations: Microsoft has set goals to be carbon negative, water positive, and zero waste by 2030. Failure to meet these goals or comply with evolving environmental disclosure requirements could result in penalties, lawsuits, or reputational damage.
4. Financial Impact Map
Intense Market Competition → Operating Expenses → Increased costs for research and development, marketing, and sales incentives. Platform-Based Ecosystem Risks → Operating Margins → Shifting to a vertically-integrated model or competing with low-cost operating systems may reduce margins. Cloud and AI Infrastructure Investment → Operating Margins → Significant development and operational costs to build AI infrastructure reduce operating margins. Cybersecurity Incidents → Revenue / Operating Expenses → Potential for reduced revenue, increased costs for remediation, and liability claims. IRS Tax Audit (2004-2013) → Provision for Income Taxes / Net Income → The IRS is seeking $28.9 billion in additional tax payments plus penalties and interest.
Recent Filings
| Form | Filed | Period |
|---|---|---|
| 8-K | Jan 2026 | — |
| 10-Q | Jan 2026 | Dec 2025 |
| 14A | Oct 2025 | — |
| 10-K | Jul 2025 | Jun 2025 |
AI-extracted key facts from press releases and SEC filings. Significance 1–10.
Microsoft price target cut to $550 from $600 at Scotiabank, Outperform rating maintained
- ▸Scotiabank lowered MSFT price target to $550 from $600
- ▸Analyst Patrick Colville reiterated Outperform rating
- ▸Q3 results described as strong by analyst
- ▸Q4 guidance noted as 'full speed ahead'
Roundhill MSFW ETF down 34% since July 2025 launch amid volatile weekly distributions
- ▸MSFW shares fell 34% from $39.90 launch price to $26.51
- ▸Fund targets 1.2x leveraged exposure to Microsoft common shares
- ▸Weekly distributions fluctuated from $0.966 to $0.074 per share
- ▸Underlying Microsoft stock declined approximately 23% year-to-date through March 2026
- ▸Expense ratio for the ETF is 0.99%
Microsoft Q2 Revenue $81.3B +17% YoY, Non-GAAP EPS $4.14 Beats Estimates
- ▸Q2 revenue $81.3B, +17% YoY
- ▸Non-GAAP EPS $4.14, beat estimates by 6.7%
- ▸Azure and cloud services revenue +39% YoY
- ▸Commercial AI bookings surged 230% in Q2
- ▸Commercial remaining performance obligation $625B, +110% YoY
SpaceX IPO plans $75B raise to fund orbital AI data center satellite network
- ▸SpaceX files for IPO targeting up to $75B valuation
- ▸Plan involves launching 1 million data-center satellites into orbit
- ▸Project aims to bypass terrestrial power and water constraints for AI
- ▸Microsoft abandoned undersea 'Project Natick' due to high costs and lack of demand
- ▸Analysts cite high launch costs and inability to upgrade orbital hardware as major risks
Microsoft Q2 Cloud Revenue Tops $50B, Up 26% YoY; Azure Growth Hits 39%
- ▸Q2 FY2026 Cloud revenue exceeded $50 billion for the first time
- ▸Azure and other cloud services revenue grew 39% YoY
- ▸Microsoft 365 Copilot reached 15 million paid seats, +160% YoY
- ▸Tudor Investment Corp increased MSFT stake by 95% in Q4 2025
- ▸Institutional focus shifting to AI agents for automated procurement and project management
Benchmark initiates Microsoft at Buy with $450 target citing valuation disconnect
- ▸Benchmark initiates coverage with Buy rating and $450 price target
- ▸Q2 FY2026 net income +59% YoY to $38.46B
- ▸Q2 FY2026 revenue $81.27B, +17% YoY
- ▸Commercial remaining performance obligation +110% YoY to $625B
- ▸Azure revenue +39% YoY in Q2 FY2026
Microsoft FY26 Capex Projected to Reach $110B–$120B Amid Rising AI Infrastructure Costs
- ▸FY26 capital expenditures expected to reach $110B–$120B
- ▸Last four quarters of capex totaled $83B, exceeding $80B AI commitment
- ▸Azure demand backlog doubled to $625B
- ▸Azure revenue growth slowed to 39% with 37% forward guidance
- ▸Capex as percentage of operating cash flow climbed to 47.4%
Microsoft to invest $5.5 billion in Singapore cloud and AI infrastructure by 2029
- ▸$5.5 billion total investment planned for Singapore
- ▸Focus on cloud computing and artificial intelligence infrastructure
- ▸Investment timeline spans through 2029
- ▸Expansion supports regional AI and digital transformation initiatives
Microsoft Q2 revenue $81.3B +17% YoY, FY26 capex guidance raised to $146B
- ▸Q2 revenue $81.3B, up 17% YoY
- ▸FY26 capital expenditure guidance increased to $146B for AI infrastructure
- ▸Q2 GAAP earnings +60% YoY, non-GAAP earnings +23% YoY
- ▸Remaining performance obligations (RPOs) +110% YoY to $625M
- ▸Q1 2026 share price declined 24%, worst quarterly performance since 2008
Microsoft to invest $1 billion in Thailand cloud and AI infrastructure
- ▸Investment exceeds $1 billion for Thailand cloud and AI infrastructure
- ▸Project focuses on expanding data-center footprint and local talent upskilling
- ▸Shares rose 3.3% to $370.54 following announcement
- ▸Stock remains down 21.7% year-to-date
- ▸Company trading 31.6% below 52-week high of $542.07