Company Introduction
Headquarters Location: Redmond, Washington, USA
Core Business Summary: Microsoft is a technology company that develops, manufactures, licenses, and supports a wide range of software products, services, and devices.
Overview
$523.98
38.41
13.64
$3,894.83B
Company Overview
Industry Sector: Technology
Industry Trends
Industry Growth: The global cloud computing market is expected to grow at a CAGR of 17.5% from 2022 to 2025.
Key Demand Drivers: Increasing demand for digital transformation, remote work, and artificial intelligence
CAGR: 17.5
Major Competitors: Amazon Web Services (AWS), Alphabet (Google Cloud), IBM
Financials
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $91.15B | $96.57B | $110.36B | $125.84B | $143.02B | $168.09B | $198.27B | $211.92B | $245.12B | $281.72B |
| YoY % | +5.9% | +14.3% | +14.0% | +13.7% | +17.5% | +18.0% | +6.9% | +15.7% | +14.9% | |
| EBITDA | $33.50B | $40.90B | $49.47B | $58.06B | $68.42B | $85.13B | $100.24B | $105.14B | $133.01B | $160.17B |
| YoY % | +22.1% | +21.0% | +17.4% | +17.8% | +24.4% | +17.7% | +4.9% | +26.5% | +20.4% | |
| FCF | $24.98B | $31.38B | $32.25B | $38.26B | $45.23B | $56.12B | $65.15B | $59.48B | $74.07B | $71.61B |
| YoY % | +25.6% | +2.8% | +18.6% | +18.2% | +24.1% | +16.1% | -8.7% | +24.5% | -3.3% | |
| EPS | 2.76 | 3.31 | 3.88 | 4.75 | 5.75 | 7.97 | 9.20 | 9.81 | 11.81 | 13.64 |
| YoY % | +19.9% | +17.2% | +22.4% | +21.1% | +38.6% | +15.4% | +6.6% | +20.4% | +15.5% |
Growth Drivers
Historical Growth Drivers: Cloud computing adoption, artificial intelligence, and strategic partnerships (e.g., LinkedIn acquisition)
Future Growth Drivers: Expansion into new markets (e.g., healthcare, finance), increased adoption of Azure and Dynamics, and growth of the gaming industry
Product Innovation: Development of new AI-powered products and services, such as Microsoft Bot Framework
Technology Adoption: Increased use of cloud computing, AI, and Internet of Things (IoT) technologies
Market Position
Competitive Position: Leader in the global cloud computing market
Estimated Market Share: 21.1
Technological Moat: Strong brand recognition, large customer base, and continuous innovation
Strengths
- Microsoft's revenue has grown by 17.6% in the last 12 months, with a net income of $61.3 billion
- Microsoft's dividend yield is 0.98%, with a payout ratio of 29.4%
- Microsoft has $132.9 billion in cash and cash equivalents, with a debt-to-equity ratio of 0.25
- Microsoft invests heavily in R&D, with $20.3 billion spent in the last 12 months
Weaknesses
- Microsoft's revenue is exposed to cyclical fluctuations in the technology industry
- Microsoft is subject to various regulatory risks, including antitrust laws and data protection regulations
- Microsoft faces intense competition from other technology companies, including Amazon, Google, and IBM
- Microsoft's global operations expose it to geopolitical risks, including trade tensions and cybersecurity threats
Valuations
Valuations for MSFT
| Formula | Bull | Base | Bear | Margin of Safety |
|---|---|---|---|---|
| Ben Graham | $525.14 | $443.30 | $388.74 | -18.2% |
| Peter Lynch | – | $196.14 | – | -167.1% |
Rule of thumb (Lynch):
PEG ≈ 1 → Fairly valued
PEG < 1 → Undervalued (growth cheap relative to earnings)
PEG > 1.5 → Overvalued
Outlook
Forward Looking Analysis: Microsoft is well-positioned for long-term growth, driven by its strong position in the cloud computing market, innovative products and services, and strategic partnerships. However, the company faces risks from increased competition, regulatory challenges, and cyclical fluctuations in the technology industry. Over the next 3-5 years, Microsoft is expected to continue to invest in AI, cloud computing, and other emerging technologies, driving revenue growth and expanding its market share.
Stock Price Performance
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Price | 55.57 | 65.55 | 88.52 | 119.02 | 152.11 | 242.35 | 309.42 | 287.23 | 424.57 | 382.19 |
| YoY % | +18.0% | +35.0% | +34.5% | +27.8% | +59.3% | +27.7% | -7.2% | +47.8% | -10.0% |
Stock 3 Year Rolling CAGR
| Metric | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | Average |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 6.58% | 9.23% | 9.02% | 10.13% | 11.50% | 8.03% | 7.33% | 9.96% | 8.97% |
| EBITDA | 13.87% | 12.38% | 11.42% | 13.61% | 13.57% | 7.29% | 9.89% | 15.06% | 12.14% |
| FCF | 8.89% | 6.83% | 11.94% | 13.62% | 12.93% | 1.96% | 4.37% | 6.39% | 8.37% |
| EPS | 12.02% | 12.79% | 14.01% | 18.83% | 16.96% | 7.17% | 8.68% | 11.61% | 12.76% |
| Price | 16.79% | 22.00% | 19.78% | 26.75% | 26.71% | 5.83% | 11.12% | 9.99% | 17.37% |
