Is a Summer Slowdown Ahead for Microsoft Stock?

Core Viewpoint - Microsoft Corporation has shown strong performance in 2025, with a stock increase of over 23% in the three months ending June 10, supported by positive earnings reports and full-year guidance [1][2]. Financial Performance - Microsoft reported better-than-expected revenue and earnings in its April earnings report, confirming its full-year guidance [1]. - Year-over-year earnings per share (EPS) growth is expected to decline from a range of 14% to 17% in 2025 to around 11% to 14% in 2026, indicating that the stock may be priced for stronger growth than it will deliver [2]. Valuation Metrics - As of June 10, Microsoft stock is trading at approximately 37 times earnings and about 36 times forward earnings, which is a 5% premium to its historical norms [3]. - Compared to competitors, Amazon.com Inc. trades around 39 times earnings, while Apple Inc. trades around 31 times earnings, with Microsoft's growth prospects considered stronger [4]. Technical Analysis - A golden cross pattern was formed in Microsoft stock, indicating a potential bullish trend, as the 50-day simple moving average crossed above the 200-day simple moving average [5][6]. - The golden cross pattern is based on the stock's six-month chart, suggesting a longer-term bullish outlook [7]. Market Sentiment - The 12-month stock price forecast for Microsoft is $511.57, representing an 8.63% upside based on 33 analyst ratings [9]. - Institutional buying has decreased by nearly 50% in the last quarter, which may indicate a pause in activity as the stock approaches all-time highs [9][10]. - Despite the decrease in institutional volume, the long-term outlook for Microsoft remains bullish, particularly due to its partnership with OpenAI [10][11].