Microsoft(US:MSFT) Haitong Securities International·2025-07-31 05:08Investment Rating - The report indicates a positive outlook for Microsoft, with strong revenue growth and performance across various segments, suggesting an "Outperform" rating for the stock in the upcoming 12-18 months [15][21]. Core Insights - Microsoft reported a robust Q4 FY25, achieving an 18% year-over-year revenue growth to $76.4 billion, driven by significant contributions from cloud and AI services, with Azure revenue growing by 39% [15][17]. - The company’s cloud business, particularly Azure, has seen accelerated growth due to increased enterprise AI deployments and cloud migration, marking a pivotal moment in its service offerings [3][17]. - Microsoft’s investment in AI infrastructure is substantial, with capital expenditures reaching $24.2 billion in Q4, and expectations for continued increases in FY26 to meet ongoing demand [20][21]. Summary by Sections Productivity & Business Processes - Revenue grew 16% year-over-year to $33.1 billion, driven by strong performance in Microsoft 365 commercial and consumer segments, with M365 Commercial cloud revenue increasing by 18% [16][12]. - LinkedIn revenue rose by 9%, and Dynamics 365 saw a 23% increase, reflecting broad-based demand across workloads [16][18]. Intelligent Cloud - Intelligent Cloud revenue increased by 27% year-over-year to $29.9 billion, significantly exceeding expectations, primarily due to Azure's 39% growth [17][12]. - Azure's growth was fueled by enterprise AI deployments and successful cloud migrations, including a notable SAP migration case [3][17]. More Personal Computing - Revenue in this segment rose by 9% year-over-year to $13.5 billion, with notable contributions from Windows OEM and Xbox [18][12]. - Xbox content and services revenue increased by 13%, supported by successful game launches and higher user engagement [18][12]. AI Strategy & Capital Expenditures - Microsoft continues to expand its AI capabilities, with over 100 million monthly active users engaging with AI features across its products [19][20]. - Capital expenditures for Q4 reached $24.2 billion, with expectations for Q1 FY26 to exceed $30 billion, reflecting the company's commitment to AI infrastructure [20][21]. Outlook - For Q1 FY26, Microsoft anticipates Azure revenue growth of approximately 37% year-over-year, with total revenue guidance set between $74.6 billion and $75.7 billion [21][23].