Microsoft's Azure Cloud Business Continues Impressive Growth
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 09 2026
0mins
Should l Buy MSFT?
Source: NASDAQ.COM
- Azure Revenue Growth: Microsoft's Azure cloud computing business has achieved a year-over-year growth rate of 39%, indicating strong demand for its computing resources, which further solidifies Microsoft's market position in the AI era and is expected to drive future revenue growth.
- Strong Overall Performance: Microsoft's total revenue increased by 17% year-over-year to $81.3 billion, with its Productivity and Business Processes division growing by 16% and consumer cloud revenue rising by 29%, demonstrating excellent performance across its customer base and the positive impact of AI feature integration on business growth.
- Opportunity in OpenAI Investment: Microsoft holds a 27% stake in OpenAI, and while OpenAI's contribution to Microsoft's overall business is limited, investing in Microsoft provides indirect exposure to generative AI, enhancing the attractiveness of Microsoft stock for investors.
- Attractive Valuation for Investment: Microsoft's current operating price-to-earnings ratio is near its lowest levels since 2020, and despite trading at a premium in the past, this valuation correction presents a compelling buying opportunity for investors, with significant upside potential expected over the next few years.
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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: 356.770
Low
500.00
Averages
631.36
High
678.00
Current: 356.770
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company that develops and supports software, services, devices, and solutions. Its Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. It comprises Microsoft 365 Commercial products and cloud services; Microsoft 365 Consumer products and cloud services; LinkedIn, and Dynamics products and cloud services. The Intelligent Cloud segment consists of its public, private, and hybrid server products and cloud services. It comprises server products and cloud services, including Azure, and enterprise and partner services, including Enterprise Support Services. Its More Personal Computing segment primarily comprises Windows and Devices, including Windows OEM licensing; Gaming, including Xbox hardware and Xbox content; Search and news advertising, comprising Bing and Copilot, Microsoft News, and Microsoft Edge.
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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- Valuation Attractiveness Increases: Microsoft's 12-month forward P/E ratio has fallen to its lowest level in nearly a decade, with an RSI of 22.26 indicating oversold conditions that may signal a rebound opportunity, although skepticism about its future remains prevalent in the market.
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- Stable Revenue Structure: With 80% of revenue coming from services and other businesses, Microsoft's service sales rose by 21% despite only 1% growth in product sales, indicating a stable income source even during economic downturns, which boosts investor confidence.
- Attractive Valuation: Trading at a price-to-earnings ratio of only 22, in line with the S&P 500 average, and generating over $119 billion in profit over the past 12 months, Microsoft's stock presents an appealing option for risk-averse investors.
- Dividend Return: Offering a dividend yield of about 1%, Microsoft enhances its attractiveness as a long-term investment, particularly for retirees seeking stable cash flow alongside capital appreciation.
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- Investment Advice: Billionaire investor Bill Ackman advises investors to buy quality businesses during price dips, asserting that many high-quality companies are trading at extremely attractive valuations amid market volatility.
- Focus on Quality Firms: Ackman's Pershing Square Capital Management has heavily invested in the 'Magnificent Seven,' including Alphabet, Amazon, and Meta Platforms, which are currently trading at significantly lower price multiples, presenting buying opportunities.
- Long-Term Investment Perspective: While AI stocks face issues like excessive investment and circular financing, Ackman emphasizes that investors should look for companies whose core thesis remains intact, suggesting that this presents a good long-term buying opportunity despite the ongoing conflict.
See More
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- Market Expansion Goals: The company plans to use the funds to expand into the U.S. market, with CEO Sunghyun Park stating that the main targets are large lab customers like Meta and xAI, rather than traditional hyperscalers, highlighting its unique market positioning.
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- Supply Chain Challenges and Opportunities: Despite facing challenges with memory chip shortages, Park noted that Rebellions is well-positioned to secure memory supplies due to investments from major manufacturers like Samsung and SK Hynix, enhancing its competitive edge in the market.
See More
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- Technological Competitive Edge: Rebellions' Rebel100 NPU chips focus on AI inferencing, offering higher energy efficiency and performance; despite competition from Nvidia and other startups, its unique technological positioning provides a competitive advantage in the market.
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