Microsoft Stock Dips despite Q1 Success and Robust Cloud Growth
Microsoft (MSFT) has posted strong results for its fiscal first quarter, which ended on September 30, 2025. The company reported earnings per share (EPS) of $4.13, reflecting an impressive 23% increase year-over-year. This figure significantly surpassed analysts’ expectations, which estimated EPS at $3.67.
Q1 Revenue Performance
In the same quarter, Microsoft achieved a total revenue of $77.7 billion. This amount exceeded the forecast of $75.38 billion set by market analysts. Overall, Microsoft’s sales rose by 18% compared to the previous year.
Market Reaction
Despite these positive financial results, Microsoft stock dropped by 3% in after-hours trading. This decline is believed to stem from worries over an Azure outage that occurred shortly before the earnings announcement.
Shareholder Returns and Investments
During this quarter, the technology giant returned $10.7 billion to its shareholders. This was achieved through dividends and share buybacks, reflecting Microsoft’s ongoing commitment to shareholder value while continuing to invest in AI infrastructure.
Strong Demand for Microsoft Cloud
Amy Hood, Microsoft’s CFO, highlighted that the company exceeded expectations in revenue, operating income, and EPS. She attributed this success to robust demand for Microsoft Cloud services.
- Microsoft Cloud revenue reached $49.1 billion, a 26% increase.
- Azure and other cloud services grew by 40%.
- Commercial remaining performance obligations climbed 51% to $392 billion.
CEO Satya Nadella emphasized that the company’s expansive cloud and AI capabilities are providing significant real-world contributions, especially through Copilot integrations across its productivity, security, and development tools.
Segment Performance
Microsoft’s More Personal Computing segment also demonstrated growth, rising by 4% to $13.8 billion. The revenue from Windows OEM and Devices increased by 6%, and search and news advertising revenue improved by 16%.
Wall Street Outlook on MSFT Stock
Looking ahead, Microsoft stock has garnered a “Strong Buy” consensus rating from analysts, with 33 buy ratings issued over the last three months. The average price target for MSFT stock stands at $629.43, indicating a potential upside of 16.76% from current levels.
Investors should assess the potential risks posed by recent outages in addition to the company’s strong fundamentals as they consider Microsoft’s stock.
