You are browsing the Hong Kong website, Regulated by Hong Kong SFC (CE number: BJA907). Investment is risky and you must be cautious when entering the market.
Microsoft Earnings: Cloud and AI Boost FY25 Q4 Revenue to $76.4 Billion
uSMART盈立智投 08-05 16:53

On July 30, Microsoft released its results for fiscal 2025 Q4 (ended June 30). The company posted revenue of $76.4 billion, up 18% year-over-year; operating income of $34.3 billion, up 23%; net income of $27.2 billion, up 24%; and diluted EPS of $3.65 — all ahead of Wall Street expectations.

 

Key Numbers at a Glance

All three business segments grew: Productivity & Business Processes revenue reached $33.1 billion (+16%), Intelligent Cloud $29.9 billion (+26%), and More Personal Computing $13.5 billion (+9%).

Microsoft Cloud generated $46.7 billion in quarterly revenue, accounting for more than 60% of the total.

For the full year, fiscal 2025 revenue was $281.7 billion (+15%), while net income surpassed the $100 billion mark for the first time, hitting $101.8 billion.

 

Cloud and AI as Growth Engines

On the earnings call, CEO Satya Nadella and CFO Amy Hood repeatedly emphasized that “Copilot is scaling commercially.” The Copilot family now exceeds 100 million monthly active users; GitHub Copilot enterprise customers are up 75% year-over-year, serving 20 million developers; and Azure OpenAI call volume is seven times last year’s level. Morgan Stanley and Citi estimate that Copilot could add $25-30 billion in incremental revenue by 2026, becoming a “second cash machine” alongside Microsoft Cloud.

Massive cap-ex and AI income form a virtuous cycle: more than 400 data centers across 70 regions are “AI-first,” so every inference request from ChatGPT or Copilot flows through Azure. This infrastructure helps Microsoft maintain a 71% gross margin and push net margin up to 36%.

 

What the Earnings Tell Investors

Another highlight is the surging advertising business. “Search and news advertising” revenue jumped 21% year-over-year, handily outpacing Google and Meta. By embedding generative-AI recommendations into sticky touchpoints such as Outlook, Edge, and Windows, Microsoft achieves ROI of 4.0-4.5, far better than traditional search or social ads. The “stealth placement” converts even better in enterprise settings, opening a new high-quality monetization channel.

Looking ahead, valuation debates are narrowing. Microsoft now trades at roughly 33-35 times forward 12-month earnings, and investment banks have raised their price targets to $510-$540. Their rationale: AI cap-ex is tightly matched with contracted demand, cloud and subscriptions provide lagged yet steady cash conversion, and new verticals like advertising are delivering upside leverage.

 

Follow us
Find us on Facebook, Twitter , Instagram, and YouTube or frequent updates on all things investing.Have a financial topic you would like to discuss? Head over to the uSMART Community to share your thoughts and insights about the market! Click the picture below to download and explore uSMART app!
Disclaimers
uSmart Securities Limited (“uSmart”) is based on its internal research and public third party information in preparation of this article. Although uSmart uses its best endeavours to ensure the content of this article is accurate, uSmart does not guarantee the accuracy, timeliness or completeness of the information of this article and is not responsible for any views/opinions/comments in this article. Opinions, forecasts and estimations reflect uSmart’s assessment as of the date of this article and are subject to change. uSmart has no obligation to notify you or anyone of any such changes. You must make independent analysis and judgment on any matters involved in this article. uSmart and any directors, officers, employees or agents of uSmart will not be liable for any loss or damage suffered by any person in reliance on any representation or omission in the content of this article. The content of the article is for reference only and does not constitute any offer, solicitation, recommendation, opinion or guarantee of any securities, virtual assets, financial products or instruments. Regulatory authorities may restrict the trading of virtual asset-related ETFs to only investors who meet specified requirements. Any calculations or images in the article are for illustrative purposes only.
Investment involves risks and the value and income from securities may rise or fall. Past performance is not indicative of future performance. Please carefully consider your personal risk tolerance, and consult independent professional advice if necessary.
uSMART
Wealth Growth Made Easy
Open Account