In the face of persistent macroeconomic challenges, Microsoft (MSFT) has proven its mettle, delivering an impressive earnings report for the third quarter of its fiscal 2025. The company’s stellar performance was driven primarily by the continued strength of its cloud business, fueled by the surging demand for artificial intelligence (AI) services.

Following the announcement, investor sentiment soared, with MSFT shares gaining nearly 7.6% the next day. While the stock has not yet shown dramatic gains in 2025, optimism remains high on Wall Street regarding its potential.

Oppenheimer applauded its quarterly performance and the growing traction of Azure and AI. The firm highlighted the tech giant’s strategic edge in enterprise IT, noting that Microsoft’s footprint across productivity solutions continues to set it apart.

Oppenheimer analysts have positioned the company as a relative “safer harbor” amid the turbulence in the software sector.

About Microsoft Stock

Microsoft (MSFT), nestled in Redmond, Washington, has long held court as a titan in the tech world. With more than 80% share of the global PC operating system market, the company has etched itself deep into the foundation of modern computing. 

Its Microsoft 365 suite continues to be a go-to solution for productivity, relied upon by businesses and individuals across the globe. 

Over the past 52 weeks, MSFT has logged a gain of 9.3%.

At present, the stock is trading at 30.3 times forward adjusted earnings and 12 times sales. The figures suggest a premium when held against industry peers. However, when lined up against its own five-year average multiples, it seems like a potential bargain. 

Microsoft Surpasses Q3 Earnings

On April 30, Microsoft unveiled its fiscal 2025 third-quarter earnings, which surpassed analyst expectations. The tech behemoth reported revenue of $70.07 billion, representing a 13% increase from the same period last year. The figure surpassed analyst expectations by a solid $1.64 billion.

Azure and other cloud services proved to be the linchpin once again, registering a 33% year-over-year increase, handily beating company guidance. Oppenheimer noted that third-quarter Azure growth and guidance exceeded buy-side expectations by 400 basis points, underscoring the momentum in AI-related workloads. 

Microsoft’s profitability also impressed, with operating margins reaching 45.7%, up 108 basis points from a year earlier. Net income stood at $25.8 billion, translating into earnings of $3.46 per share, well ahead of the $3.22 per share expected by the Street.

Looking to the road ahead, the outlook for Microsoft’s fiscal fourth quarter carries a confident tone. Oppenheimer anticipates Azure to grow 34% to 35% in constant currency, while Intelligent Cloud revenue is projected to come in between $28.75 billion and $29.05 billion, both figures running ahead of consensus. 

The Productivity and Business Processes segment is forecast to generate between $32.05 billion and $32.35 billion, again surpassing estimates.

While there were a few soft spots, including higher-than-anticipated capital expenditures and slower growth in Microsoft 365 Consumer seats, the broader narrative remains favorable. The firm emphasized Microsoft’s ability to expand its footprint in the hyperscale market and capitalize on the ongoing generative AI cycle.

Looking at earnings expectations, the Street forecasts Microsoft’s EPS to rise 11.9% in the fourth quarter to $3.30. For the full fiscal year 2025, EPS is expected to climb 10.9% year over year to $13.09. The growth trajectory appears intact as projections for fiscal 2026 point to a 12% increase in EPS, bringing it to $14.66.

What Do Analysts Expect for Microsoft Stock?

Wall Street is wearing its bullish hat, and the optimism is hard to miss. The stock has earned an overall “Strong Buy” consensus, a telling sign of the Street’s conviction. Among 45 analysts, a commanding 37 have issued a “Strong Buy,” while four lean toward a “Moderate Buy.” The remaining four are taking a more cautious route, opting for a “Hold.”

The average price target of $490.82 represents potential upside of 15.4%, while the Street-high target of $600 signals a possible surge of 41% from current levels. In a market that often moves on whispers, this level of consensus speaks volumes.