Microsoft (NASDAQ:MSFT) Posts Quarterly Earnings Results, Beats Estimates By $0.28 EPS

Microsoft (NASDAQ:MSFT) released its quarterly earnings data on Wednesday. The software giant reported $4.14 EPS for the quarter, beating analysts’ consensus estimates of $3.86 by $0.28, FiscalAI reports. The business had revenue of $81.27 billion for the quarter, compared to the consensus estimate of $80.28 billion. Microsoft had a return on equity of 33.48% and a net margin of 39.04%.The business’s revenue for the quarter was up 16.7% on a year-over-year basis. During the same quarter in the prior year, the business posted $3.23 EPS.

Here are the key takeaways from Microsoft’s conference call:

• Microsoft Cloud surpassed $50 billion in revenue (up 26% YoY), with strong AI-driven momentum across Foundry (>$2B ARR, 60% YoY), Microsoft 365 Copilot (15M paid seats) and growing Copilot/GitHub adoption.
• The company is rapidly ramping AI infrastructure—adding nearly 1 GW of capacity, launching the Maia 200 accelerator and Cobalt 200 CPU—while Q2 CapEx was $37.5 billion (about two‑thirds on short‑lived GPUs/CPUs), highlighting investor concerns about ROI and supply allocation.
• Commercial bookings and RPO surged (bookings +230%, commercial RPO $625 billion, +110% YoY), but roughly 45% of that RPO is tied to OpenAI, creating concentration and potential quarterly volatility risk.
• Financials beat expectations with revenue of $81.3 billion (+17%), EPS $4.14 (+24%), operating income +21%, operating cash flow up 60%, and $12.7 billion returned to shareholders, underscoring strong execution.

Microsoft Stock Performance

Shares of NASDAQ:MSFT traded up $3.02 during trading on Friday, reaching $436.52. The company had a trading volume of 9,937,680 shares, compared to its average volume of 31,407,912. Microsoft has a fifty-two week low of $344.79 and a fifty-two week high of $555.45. The company has a debt-to-equity ratio of 0.10, a current ratio of 1.40 and a quick ratio of 1.39. The stock’s fifty day moving average price is $476.67 and its 200 day moving average price is $500.21. The firm has a market capitalization of $3.24 trillion, a price-to-earnings ratio of 27.33, a price-to-earnings-growth ratio of 1.94 and a beta of 1.07.

Microsoft Announces Dividend

The business also recently announced a quarterly dividend, which will be paid on Thursday, March 12th. Shareholders of record on Thursday, February 19th will be paid a $0.91 dividend. This represents a $3.64 annualized dividend and a dividend yield of 0.8%. The ex-dividend date is Thursday, February 19th. Microsoft’s dividend payout ratio (DPR) is 25.89%.

Microsoft News Summary

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Microsoft beat Wall Street on top and bottom lines — EPS $4.14 and revenue $81.27B, showing continued cloud- and AI-driven revenue growth. Microsoft beats Wall Street expectations
• Positive Sentiment: Commercial backlog (RPO) surged — companies report a very large contracted backlog (reported at ~$625B), signaling strong demand for Azure and AI services over coming years. Demand backlog doubles to $625B
• Positive Sentiment: New customer wins for Azure AI capacity — reports that Perplexity signed a multi-year cloud deal with Microsoft (reported at ~$750M) reinforce Azure demand and ecosystem monetization. Perplexity signs $750M deal with Microsoft
• Neutral Sentiment: Analyst reaction is mixed — many firms reaffirm “buy/overweight” but trimmed price targets; the Street remains broadly positive on the long-term AI thesis while re-pricing near-term expectations. Analysts slash forecasts after Q2
• Neutral Sentiment: Product/tech progress continues — Microsoft announced its Maia 200 AI accelerator and reiterated use of both in‑house and third‑party chips, a strategic signal for vertical integration even as it still buys GPUs. Microsoft launches Maia 200
• Negative Sentiment: Heavy AI capex and slower Azure growth spooked investors — Microsoft reported ~$37.5B in capex and guided to slightly lower sequential Azure growth, prompting a sharp selloff as traders question near-term returns on massive infrastructure spending. Why Microsoft tumbled 10%
• Negative Sentiment: Market impact and sentiment shock — the earnings reaction triggered sector-wide selling, software ETFs fell and MSFT’s market cap dropped materially, increasing volatility and re-rating near-term multiples. Software ETFs sink as MSFT stumbles
• Negative Sentiment: Investor litigation and scrutiny — law firms have announced investigations and outreach to investors, a sign of heightened legal/regulatory attention after the volatile reaction. Investor investigations announced

Insider Buying and Selling at Microsoft

In other news, EVP Takeshi Numoto sold 2,850 shares of the business’s stock in a transaction dated Thursday, December 4th. The shares were sold at an average price of $478.72, for a total transaction of $1,364,352.00. Following the transaction, the executive vice president directly owned 55,782 shares in the company, valued at $26,703,959.04. The trade was a 4.86% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the SEC, which is available through this link. Also, CEO Judson Althoff sold 12,750 shares of the firm’s stock in a transaction dated Tuesday, December 2nd. The shares were sold at an average price of $491.52, for a total transaction of $6,266,880.00. Following the completion of the sale, the chief executive officer owned 129,349 shares of the company’s stock, valued at approximately $63,577,620.48. The trade was a 8.97% decrease in their position. The disclosure for this sale is available in the SEC filing. In the last three months, insiders have sold 54,100 shares of company stock valued at $27,598,872. 0.03% of the stock is owned by company insiders.

Hedge Funds Weigh In On Microsoft

A number of large investors have recently modified their holdings of MSFT. Norges Bank acquired a new stake in Microsoft in the second quarter valued at $50,493,678,000. Nuveen LLC purchased a new position in shares of Microsoft in the 1st quarter valued at about $18,733,827,000. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC lifted its stake in shares of Microsoft by 500.0% in the third quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC now owns 59,543,261 shares of the software giant’s stock valued at $30,840,432,000 after purchasing an additional 49,618,571 shares during the period. Laurel Wealth Advisors LLC boosted its holdings in Microsoft by 49,640.3% during the second quarter. Laurel Wealth Advisors LLC now owns 29,967,038 shares of the software giant’s stock worth $14,905,904,000 after buying an additional 29,906,791 shares in the last quarter. Finally, Northern Trust Corp grew its position in Microsoft by 16.1% during the fourth quarter. Northern Trust Corp now owns 83,787,746 shares of the software giant’s stock worth $35,316,535,000 after buying an additional 11,600,470 shares during the period. 71.13% of the stock is owned by hedge funds and other institutional investors.

Analysts Set New Price Targets

Several brokerages have commented on MSFT. Rothschild & Co Redburn dropped their price target on shares of Microsoft from $500.00 to $450.00 and set a “neutral” rating on the stock in a research note on Wednesday, January 21st. Weiss Ratings reaffirmed a “buy (b)” rating on shares of Microsoft in a research report on Thursday, January 22nd. Jefferies Financial Group restated a “buy” rating on shares of Microsoft in a research note on Thursday, January 22nd. Scotiabank dropped their price objective on Microsoft from $650.00 to $600.00 and set a “sector outperform” rating on the stock in a report on Thursday. Finally, Bank of America reduced their target price on Microsoft from $640.00 to $520.00 and set a “buy” rating for the company in a report on Monday. One equities research analyst has rated the stock with a Strong Buy rating, forty have issued a Buy rating and three have assigned a Hold rating to the company’s stock. Based on data from MarketBeat.com, Microsoft presently has a consensus rating of “Moderate Buy” and a consensus price target of $597.73.

Microsoft Company Profile

Microsoft Corporation is a global technology company headquartered in Redmond, Washington. Founded in 1975 by Bill Gates and Paul Allen, Microsoft develops, licenses and supports a broad range of software products, services and devices for consumers, enterprises and governments worldwide. Its operations span personal computing, productivity software, cloud infrastructure, enterprise applications, developer tools and gaming.

Microsoft’s product portfolio includes the Windows operating system and the Microsoft 365 suite of productivity and collaboration tools (Office apps, Outlook, Teams).