Microsoft's AI Business Surges, Outlook Remains Positive
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Source: Fool
- Strong Financial Performance: In Q3 of fiscal year 2026, Microsoft's revenue increased by 18% year-over-year to $82.9 billion, demonstrating robust performance in cloud computing and AI, despite a 17% drop in stock price over the past year.
- Rapid Cloud Growth: Microsoft's Azure and other cloud services revenue surged by 40% year-over-year, with a cloud backlog of $627 billion at the end of the period, reflecting the company's strong competitive position and future growth potential in the cloud market.
- Thriving AI Business: Microsoft's AI business surpassed a $37 billion annual run rate, growing 123% year-over-year, indicating the company's leadership in AI and providing strong support for future revenue growth.
- Attractive Valuation and Investment Opportunity: With a forward P/E ratio of 20.6, below the tech sector average of 22.3, and considering its strong brand and high customer loyalty, Microsoft's current stock price is seen as attractive, with potential for excellent long-term returns.
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Analyst Views on MSFT
Wall Street analysts forecast MSFT stock price to rise
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 399.760
Low
500.00
Averages
631.36
High
678.00
Current: 399.760
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company. The Company develops and supports software, services, devices, and solutions. The Company’s segments include Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services. This segment primarily comprises: Office Commercial, Office Consumer, LinkedIn, and Dynamics business solutions. The Intelligent Cloud segment consists of server products and cloud services, including Azure and other cloud services, SQL Server, Windows Server, Visual Studio, System Center, and related Client Access Licenses (CALs), and Nuance and GitHub; and Enterprise Services, including enterprise support services, industry solutions and Nuance professional services. The More Personal Computing segment primarily comprises Windows, Devices, Gaming, and search and news advertising.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Rapid Cloud Growth: Microsoft's Azure and other cloud services revenue surged by 40% year-over-year, with a cloud backlog of $627 billion at the end of the period, reflecting the company's strong competitive position and future growth potential in the cloud market.
- Thriving AI Business: Microsoft's AI business surpassed a $37 billion annual run rate, growing 123% year-over-year, indicating the company's leadership in AI and providing strong support for future revenue growth.
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