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.
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.
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%.
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.