Microsoft(US:MSFT) Soochow Securities·2025-11-04 08:24Investment Rating - The report maintains a "Buy" rating for Microsoft (MSFT) [1] Core Insights - Microsoft reported better-than-expected performance in FY26Q1, with revenue of $77.7 billion, representing an 18% year-over-year growth, and an EPS of $4.13, which is a 23% increase year-over-year [2][3] - The company expects FY26Q2 revenue to reach between $79.5 billion and $80.6 billion [2] - The growth in Microsoft's cloud business, particularly Azure, continues to show strong momentum, with Azure revenue growth of approximately 40% year-over-year [4] Revenue and Profitability - FY2024A total revenue is projected at $245.1 billion, with a year-over-year growth of 15.67% [1] - FY2025A net profit is estimated at $101.8 billion, reflecting a year-over-year growth of 15.54% [1] - The latest diluted EPS for FY2026E is forecasted to be $16.03, with a P/E ratio of 32.25 [1] Business Segment Performance - Productivity and Business Processes (PBP) revenue reached $33 billion, growing 17% year-over-year, driven by Microsoft 365 commercial cloud [3] - Intelligent Cloud (IC) revenue was $30.9 billion, with a year-over-year growth of 28%, primarily due to Azure and other cloud services [3] - More Personal Computing (MPC) revenue was $13.8 billion, growing 4% year-over-year, supported by Windows OEM and advertising businesses [3] Cloud Business Outlook - Azure's revenue growth is expected to maintain high rates, with FY26Q2 projected to grow approximately 37% year-over-year [4] - The company reported a significant increase in commercial bookings, up 112% year-over-year, largely due to commitments related to OpenAI and the growth of contracts exceeding $100 million [4] AI Integration and Ecosystem - AI penetration in Microsoft's ecosystem is increasing, with over 26 million users of GitHub Copilot and 80% of Fortune 500 companies using Azure AI Foundry [5] - Monthly Active Users (MAU) for AI features in Microsoft products reached 900 million, with Copilot series products exceeding 150 million MAU [5]