Microsoft (MSFT) reported $77.67 billion in revenue for the quarter ended September 2025, representing a year-over-year increase of 18.4%. EPS of $4.13 for the same period compares to $3.30 a year ago.The reported revenue represents a surprise of +3.62% over the Zacks Consensus Estimate of $74.96 billion. With the consensus EPS estimate being $3.65, the EPS surprise was +13.15%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determ ...

Core Insights - Microsoft's Intelligent Cloud segment is experiencing significant growth, with Q4 fiscal 2025 revenues reaching $29.9 billion, a 26% increase year over year, and Azure services growing by 39% [1][10] - The company is enhancing its AI capabilities with innovations such as the rollout of GPT-5 and the opening of a new datacenter in Austria, which positions it to capture rising AI demand [2] - AI is identified as the primary growth driver, with strong demand for AI infrastructure and increased adoption of tools like GitHub Copilot and Microsoft 365 Copilot [3] Financial Performance - Management has guided Intelligent Cloud revenues for Q1 fiscal 2026 to be between $30.1 billion and $30.4 billion, indicating continued strength [4] - The Zacks model projects Intelligent Cloud revenues to grow by 20.7% in fiscal 2026 and 21.2% in fiscal 2027, supporting a positive long-term outlook [4] Capital Expenditure and Investment - Microsoft has recorded a capital expenditure of $24.2 billion, with plans to increase this to $30 billion in Q1 fiscal 2026 to expand AI infrastructure and data centers [5] Competitive Landscape - Amazon Web Services (AWS) leads the cloud market with a 30-32% share, but Microsoft Azure is gaining traction in enterprise and hybrid adoption [6] - Google Cloud is also rapidly growing, achieving 32% annual growth and $13.6 billion in quarterly revenues, positioning itself as a strong competitor to both Microsoft Azure and AWS [7] Share Price and Valuation - Microsoft shares have appreciated by 22.2% year-to-date, outperforming the Zacks Computer – Software industry and the broader Computer and Technology sector [8] - The company trades at a forward Price/Sales ratio of 11.45X, higher than the industry average of 8.55X, indicating a premium valuation [12] Earnings Estimates - The Zacks Consensus Estimate for Microsoft's fiscal 2026 earnings is $15.35 per share, reflecting a 12.54% year-over-year growth [15]

Core Viewpoint - The Invesco QQQ Trust ETF offers a diversified and robust option for investors seeking exposure to the booming artificial intelligence (AI) industry, despite not being explicitly labeled as an AI-focused fund [1][2][4]. Group 1: ETF Overview - The Invesco QQQ Trust has been available since 1999 and includes the 100 largest non-financial companies listed on the Nasdaq stock exchange, with a significant portion being technology stocks [5]. - As of June 30, technology stocks represented approximately 61% of the Invesco QQQ ETF, providing substantial AI exposure [5]. Group 2: Major Holdings - Nvidia is the largest position in the Invesco QQQ Trust, accounting for a 9.9% weighting, and plays a crucial role in AI through its graphics processing units (GPUs) [6]. - Microsoft and Apple are the second and third largest positions, with weightings of 8.8% and 7.3%, respectively, both offering leading AI tools [7]. Group 3: Sector Diversification - The fund also includes stocks from other sectors that provide AI exposure, such as healthcare, represented by Intuitive Surgical, which offers AI-enabled analytics tools [9]. - Consumer discretionary stocks, particularly Amazon, which has a 5.5% weighting, contribute to AI exposure through its Amazon Web Services cloud computing platform and tools like Amazon Bedrock [10]. Group 4: Investment Considerations - The Invesco QQQ Trust has a low total expense ratio of 0.2%, making it a cost-effective option for investors looking to gain exposure to AI and technology innovations [12].

Financial Performance - Microsoft's quarterly earnings exceeded analysts' expectations [1] Business Segment Performance - Strong growth in Microsoft's Intelligent Cloud segment drove the positive results [1] Market Reaction - Microsoft shares increased in extended trading following the earnings report [1]

Core Viewpoint - Analysts forecast Microsoft (MSFT) to report quarterly earnings of $3.35 per share, reflecting a year-over-year increase of 13.6%, with revenues expected to reach $73.71 billion, an increase of 13.9% compared to the previous year [1]. Earnings Estimates - The consensus EPS estimate for the quarter has remained unchanged over the past 30 days, indicating a reassessment of projections by covering analysts [1][2]. Revenue Projections - Analysts expect 'Revenue- More Personal Computing' to be $12.60 billion, a decrease of 20.7% year over year [4]. - 'Revenue- Intelligent Cloud' is projected to reach $28.94 billion, showing a slight increase of 1.5% year over year [4]. - 'Revenue- Productivity and Business Processes' is anticipated to be $32.15 billion, reflecting a significant increase of 58.2% from the year-ago quarter [4]. Specific Revenue Metrics - 'Revenue- Windows' is expected to be $3.88 billion, indicating a decline of 40.2% year over year [5]. - 'More Personal Computing- Revenue from Gaming' is projected at $5.29 billion, an increase of 5.3% from the previous year [5]. - 'More Personal Computing- Search and news advertising' is estimated to reach $3.53 billion, reflecting a year-over-year increase of 11.5% [6]. Percentage Change in Revenue - The consensus estimate for 'Percentage Change in Revenue Y/Y' stands at 13.9%, compared to 15.0% from the previous year [6]. - 'Intelligent Cloud - Percentage Change in Revenue Y/Y' is estimated at 19.2%, slightly up from 19.0% reported last year [7]. - 'Productivity and Business Processes - Percentage Change in Revenue Y/Y' is forecasted to be 12.0%, compared to 11.0% last year [7]. - 'More Personal Computing - Percentage Change in Revenue Y/Y' is projected at -0.3%, down from 14.0% reported last year [8]. Unearned Revenue Estimates - 'Long-term unearned revenue' is expected to be $3.50 billion, up from $2.60 billion reported last year [8]. - 'Short-term unearned revenue' is projected to reach $57.97 billion, slightly up from $57.58 billion reported in the same quarter last year [9]. Stock Performance - Microsoft shares have changed by +2.7% in the past month, compared to a +4.6% move of the Zacks S&P 500 composite [9].

Group 1 - Earnings season is active, with notable reports from Mag 7 members including Microsoft (MSFT) and Meta Platforms (META) [1][8] - The Mag 7 trade has cooled off, but META and MSFT have shown resilience, reflecting the highest defense among peers year-to-date [1] - META shares have underperformed, down approximately 20% over the last three months, with EPS expectations lowered to $5.21, nearly a 5% decrease since February [3][4] Group 2 - META is expected to see 11% EPS growth on 13% higher sales, with advertising sales forecasted at $40.4 billion, a 13.4% increase year-over-year [4][6] - Microsoft’s EPS growth is projected at 9% on 11% higher sales, maintaining a stable revision trend [12] - The Zacks Consensus Estimate for Microsoft’s Intelligent Cloud sales is $26.1 billion, with a focus on cloud outlook and capital expenditures related to data center buildouts amid AI developments [15][16][18]