Microsoft (NDQ:MSFT): There’s still a lot more growth left in this one

Microsoft (NDQ:MSFT) really needs no introduction. We all use its products in our everyday lives, it successfully transitioned from a hardware to a software company and then to a cloud company; and now it is at the forefront of the AI revolution.

Moreover, it has managed a ~22% return in 2025 and to beat both the S&P 500 and NASDAQ for several years now. The company is the 2nd company worldwide to be capped at over US$4tn, making it the 2nd largest company on the Planet after Nvidia, which is $4.4tn. Apple is a clear third at $3.1tn.

What’s more is that Microsoft’s its most recent results show no sign of slowing down.

 

 

Sounds great, doesn’t it? But, how can a >$4tn company get any bigger? We will tell.

 

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Introduction to Microsoft (NDQ:MSFT)

Look at Microsoft’s annual report and you’ll see it has several different segments – 10 to be exact. But the majority of revenue comes from 2 segments – Server products & Cloud services and Office products & Cloud services. Following behind are Windows products and then LinkedIn.

As you can see, it is a highly diversified business. It began in 1975 and went public in 1986, led by Bill Gates until he handed the reins over to Steve Ballmer. Ballmer was succeeded in 2014 by Satya Nadella who has held he role ever since and worked his way up for 2 decades prior to that. Over time, Microsoft rose to dominance of the tech world, then had to share power after missing out on the ascendance of smartphones even in spite of growing its sales and profits.

Under Nadella’s tenure, the company has sought to become cloud-focused and clean up its reputation after more than a decade of being fined several times for anti-competitive behaviour as well as share price stagnation.

Microsoft revised its mission statement to ’empower every person and every organisation on the planet to achieve more’. And its cloud ambitions are a big part of that – its products serve everyone from small businesses to the US Department of Defence.

 

Still growing and set to continue to grow

Let’s take a look at its most recent results for FY24, even though it will be releasing FY25 results in August. The company uses July 1-June 30 despite being a US company, apparently because it aligns greater with the patterns of their customers. It made $245.1bn in revenue (up 16%) and a profit of $88.1bn (up 22%), with the latter translating to $11.80 earnings per share.

Of all its segments, it was ‘Intelligent Cloud’ that had the greatest jump in revenue (20%) and in divisional profit (31%). Growth in demand for Azure and other cloud services was exactly the reason for the growth.

The most recent update out of the company was its Q4. Cloud revenue surged 27%. Operating income jumped 23%. And Azure? Now pulling in over $75 billion annually, up 34%.

 

…With the help of AI

Behind these numbers is a much bigger story: Microsoft is one of the first tech giants turning massive AI infrastructure spend, $40 to $45 billion in CapEx this year alone, into real, monetised value. With deep integration across enterprise workflows, Microsoft isn’t just building tools. It’s embedding itself in the future operating system of business.

The bet? That Azure, Copilot, and its enterprise stack will remain the backbone of the AI economy. But with Google, Amazon, and OpenAI racing ahead, and regulators sharpening their knives, nothing is guaranteed, not even for a $3 trillion titan.

What if Microsoft’s biggest AI advantage isn’t the smartest model, but the smartest positioning?

While products like GPT-4, Claude, and Gemini compete for adoption, Microsoft has quietly embedded AI into the daily rhythm of 77,000 enterprise customers. Enter Copilot, your digital assistant inside Word, Excel, Outlook, and Teams. It’s a frictionless tool. Developers using Copilot are reportedly 55% more productive.

This deep integration is both convenient and strategic. Microsoft sits inside the workflows, files, and habits of global businesses, giving Copilot an adoption edge that’s hard to replicate. This creates a powerful flywheel: more usage, more data, more product stickiness.

But is this moat sustainable? That’s where things get interesting. As AI-native tools like Perplexity and OpenAI’s browser chip away at traditional interfaces, the next big battle may not be about who has the best model, but who owns the user journey.

 

Analysts are confident

Consensus estimates for FY26 anticipate $321bn in revenue and a $115bn profit. For FY27, $368bn revenue and a $134bn profit; and for FY28, $424bn revenue and a $163bn profit. Looking further ahead, the company expects to surpass $500bn in revenue in FY30.

The mean share price is US$594.57, which is 13% higher than right now. This growth may not seem to be that high but given Microsoft is ~$3.9bn, this would result in almost $400bn in shareholder value being created. For comparison’s sake, that is more than 3 CSLs!

Following an 8% post-earnings jump, Microsoft now trades at a P/E of 39.6 and a PEG ratio of 3.27, both well above sector medians. Clearly, the market is pricing in strong future growth. That premium reflects confidence in Microsoft’s leadership in AI, with products like Copilot, Azure AI, and GitHub Copilot already gaining traction.

 

Our conclusion

Investors thinking Microsoft cannot grow any further than US$3.8tn are mistaken. There is growth left in this one. The challenge is that the share price can fluctuate day to day, particularly when the company releases its earnings. And when growth is less than perfect, there can be an impact.

But if you invest in tech, Microsoft is one to watch. Pay close attention to its AI rollout and how deeply it integrates into enterprise workflows, because Microsoft isn’t just riding the AI wave. It’s building the current.