Microsoft Server Software Comes Under Widespread Cyberattack
The Redmond, Washington-based software maker said it had released a new security patch for customers to apply to their SharePoint servers 'to mitigate active attacks targeting on-premises servers,' adding it was working to roll out others.
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Business Insider
19 minutes ago
- Business Insider
Microsoft (MSFT) Gears Up to Meet Soaring Expectations
U.S. tech giant Microsoft (MSFT) is about to make a market splash through its Q2 earnings announcement, due after tomorrow's market close. Tomorrow, the tech bellwether is set to report another strong quarter, with very little skepticism from the market, as the stock trades near all-time highs. But for a company of Microsoft's stature, especially as one of the main drivers behind the AI revolution, it's not enough to just beat estimates. The company needs to exceed them by a meaningful margin and raise guidance to justify its premium valuation multiples based on steady growth. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. With MSFT stock decoupling from the S&P 500 (SPX) since the start of the year, justifying the long-term bullish thesis for MSFT becomes a no-brainer. The good news is that if any company can maintain steady and robust growth, it's Microsoft. Backed by a sum-of-the-parts approach—even with conservative growth assumptions—there appears to be upside for the stock, even at these historical peaks. That said, I see MSFT stock as a strong Buy. Evaluating Microsoft Stock in Detail For starters, one way to determine whether Microsoft's current share price is fairly valued is by conducting a 'sum-of-its-parts' analysis. It's a bit speculative, of course. However, we can still use a reasonable framework—estimating the fair value of its three main business segments: (1) Productivity and Business Processes, which includes Microsoft Office, LinkedIn, and Dynamics. This segment is known for its high margins and moderate growth. (2) Intelligent Cloud, home to Azure and enterprise services. It's been Microsoft's fastest-growing segment, also with strong margins—but it comes with heavier CapEx spending; and (3) More Personal Computing, which covers Windows, Surface, Xbox, and Bing. This one has slower growth and is more cyclical in nature. For Microsoft's fiscal year 2025, which ends this June, analysts are forecasting total revenue of $279 billion—roughly a 14% increase from the previous year. So far, over the first nine months of FY25, Microsoft has reported $205.2 billion in revenue. That implies an estimated $73.81 billion for Fiscal Q4—also around 14% higher year-over-year. Using the higher-end of Microsoft's Q4 outlook and adding it to what's already been reported, we estimate full-year revenues to break down like this: $120 billion from Productivity & Business Processes, $105.4 billion from Intelligent Cloud, and $54 billion from More Personal Computing—adding up to the projected $279 billion in total revenue. What Microsoft's Valuation Really Shows Under the base-case scenario for Fiscal 2025, the productivity segment is expected to post a solid 54% year-over-year gain, while Intelligent Cloud is expected to hold steady with flat growth, and More PC is expected to decline by about 13%. Assuming operating margins remain consistent with what we've seen over the past nine months, we would expect to see ~58% for Production. & Business, 42.5% for Intelligent Cloud, and around 26.5% for More PC. With that in mind, it is possible to obtain a grounded five-year projection for Microsoft's three main segments. I'm assuming a 5-year revenue CAGR of 12.5% for both Prod. & Business and Intelligent Cloud, and a more modest 2% CAGR for More PC. On margins, Prod. & Business improves by 1.5% per year, Intelligent Cloud by 2.3%, while More PC stays flat. I'm applying a WACC of 7% for Prod. & Business and Intelligent Cloud—given their more stable, recurring-revenue profiles—and 8.5% for More PC, considering its higher cyclicality and risk. With a perpetual growth rate assumption of 3%, and CapEx at 4% of revenues for Prod. & Business, the implied enterprise value comes in at around $2.4 trillion. For Intelligent Cloud, assuming a capital expenditure (CapEx) ratio of 14% of revenues, the valuation comes out to approximately $1.6 trillion. More PC, using a 5% capital expenditure (CapEx) rate, would be valued at roughly $425 billion. Add it all up—and tack on Microsoft's net cash position of $25.4 billion—and we arrive at an estimated equity value of $4.275 trillion. That's about 12% upside from the company's current market value of $3.82 trillion. In my view, this kind of breakdown helps put Microsoft's seemingly rich traditional multiples into better perspective— such as its P/E of 39.7x, which is approximately 2.7x above the sector average. At first glance, that might seem stretched, but when you break it down, it actually aligns pretty well with the company's growth trajectory. No wild assumptions, just solid fundamentals. What the Market Needs to Hear from Microsoft Tomorrow That said, with earnings news just hours away, I believe that to truly appease the market—which means posting growth metrics in line with or above what the previous valuation exercise implies—Microsoft needs to do four things: beat revenue and EPS estimates, exceed quarterly guidance, and raise forward guidance above current expectations. To back the bullish thesis on the stock, a positive update on the company's commercial bookings will be crucial in reinforcing confidence in long-term growth. For instance, remaining performance obligations totaled $235 billion in Q3 of fiscal 2024—and that number jumped to $315 billion in Q3 of fiscal 2025, primarily driven by AI deals and Microsoft's close partnership with OpenAI and ChatGPT. Another key point that I believe could be just as important is an update on Microsoft's aggressive spending on AI infrastructure. The company has guided for $80 billion in CapEx for 2025, and investors will be looking for clarity around that figure. Higher spending tends to weigh more heavily on the Intelligent Cloud segment early on. It can have a significant impact on Microsoft's equity value, depending on whether capital expenditures (CapEx) increase or decrease. However, a reduction in spending could also be interpreted as a sign that expected future demand may be cooling, which isn't necessarily ideal either. In this context, I would actually view an increase in CapEx more positively than a pullback. Is Microsoft a Buy, Hold, or Sell? Wall Street analysts are overwhelmingly bullish on MSFT going into tomorrow's earnings bombshell. In the last three months, out of 33 experts covering the stock, 30 are bullish, while only three are neutral. Not a single analyst is currently bearish. Meanwhile, MSFT's average stock price target of $558.71 implies ~9% upside potential over the coming year. Steady Growth Supports Microsoft's Upside Analyzing Microsoft's business segments individually, the consistent performance across its core operations points to steady growth in both revenue and earnings. This underpins a favorable outlook for the stock, even as it trades near record highs. The upcoming Q2 results are unlikely to expose any structural weaknesses that would materially challenge the bullish thesis. Given these factors, MSFT remains a Buy at current levels.
Business Insider
19 minutes ago
- Business Insider
Is Microsoft (MSFT) a Good Stock to Buy before Earnings?
Tech giant Microsoft (MSFT) is scheduled to report its fiscal fourth‑quarter earnings on July 30, after the market closes. Analysts expect the company to earn $3.38 per share, which would be an increase of 14% year-over-year. Furthermore, revenue is projected to come in at $73.8 billion compared to the prior year's $64.7 billion. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. It is worth noting that investors will be closely watching Microsoft's Intelligent Cloud segment, which is expected to generate $28.9 billion in revenue. This equates to a year-over-year increase of more than 22%. When breaking down the numbers further, its cloud platform Azure is projected to grow at about 34–35% in constant currency. This is slightly more than the 33% growth seen in the previous quarter, when AI services accounted for a large portion of the increase. Unsurprisingly, the Intelligent Cloud segment has been the firm's main growth driver over the past several years, as demonstrated in the image below. Separately, Microsoft's Productivity and Business Processes segment is expected to rise by about 11–12% from last year to roughly $32 billion. Investors will also be paying attention to Microsoft's capital expenditure plans (capex) and profit margins. Interestingly, the company spent close to $80 billion on capex in Fiscal 2025 in order to expand its AI infrastructure, which includes custom chips and new data centers. However, management has previously said that it will slow down the pace of its capex growth in Fiscal 2026. What Do Options Traders Anticipate? Using TipRanks' Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don't worry, the Options tool does this for you. Indeed, it currently says that options traders are expecting a 4.1% move in either direction. Is MSFT Stock a Buy? Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 30 Buys and three Holds assigned in the last three months. Furthermore, the average MSFT price target of $558.71 per share implies 9% upside potential. At the same time, TipRanks' AI analyst has an Outperform rating with a $558 price target.
Yahoo
37 minutes ago
- Yahoo
Stock market today: Dow, S&P 500, Nasdaq futures push up as Wall Street awaits Fed decision, Big Tech results
US stock futures traded flat as investors braced for the Federal Reserve's next interest rate decision and earnings from tech giants Microsoft (MSFT) and Meta (META). Futures attached to the Dow Jones Industrial Average (YM=F) and the benchmark S&P 500 (ES=F) ticked up 0.1%. Futures attached to the tech-heavy Nasdaq 100 (NQ=F) rose 0.2%. Read more: The latest on Trump's tariffs Stocks fell on Tuesday, leading the S&P 500 to snap its six-day record streak. US-China trade talks wrapped up without an extension of the tariff pause currently in place between the two countries, but Treasury Secretary Scott Bessent said President Trump would make a "final call" on the matter soon. Job openings, meanwhile, slid, raising the stakes for the July jobs report, which arrives Friday. Starbucks stock popped in after-hours trading after the company's earnings showed US sales fell less than feared. During day trading, Boeing (BA), Spotify (SPOT), Merck (MRK), and UnitedHealth (UNH) also reported earnings, with only Boeing seeing a stock jump following its results. The Fed kicked off its two-day policy meeting Tuesday and will report its decision on interest rates Wednesday at 2 p.m. ET. With the central bank is expected to hold rates steady, Wall Street will be closely watching the Fed's "dot plot" and remarks from Fed Chair Jerome Powell for signals on potential rate cuts later this year. Also on Wednesday, after the bell, Big Tech stalwarts Microsoft and Meta are set to report earnings. Both companies are contending with growing scrutiny over whether their eye-popping AI investments are paying off. Looking forward to Thursday, Apple (AAPL) and Amazon (AMZN) will report their results. Wall Street will also get another clue as to the possible direction of interest rates with the release of the Fed's preferred inflation gauge, the Personal Consumption Expenditures (PCE) index. Finally, Trump's deadline for trade partners to strike deals with the US or else face blanket tariff rates looms over markets this week, with the cutoff set for Friday. Oil prices hold after Trump-Russia row Oil prices held gains overnight Tuesday after jumping 3% Monday, with supply issues in focus. Trump's continued pressure on Russia over the Ukraine war has raised concerns over how economic sanctions will impact the Slavic state's ability to produce oil at the current rate. Reuters reports: Read more here. Oil prices hold after Trump-Russia row Oil prices held gains overnight Tuesday after jumping 3% Monday, with supply issues in focus. Trump's continued pressure on Russia over the Ukraine war has raised concerns over how economic sanctions will impact the Slavic state's ability to produce oil at the current rate. Reuters reports: Read more here. Oil prices held gains overnight Tuesday after jumping 3% Monday, with supply issues in focus. Trump's continued pressure on Russia over the Ukraine war has raised concerns over how economic sanctions will impact the Slavic state's ability to produce oil at the current rate. Reuters reports: Read more here. 擷取數據時發生錯誤 登入存取你的投資組合 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤
