For savvy investors looking for a long-term investment opportunity that is riding the unstoppable wave of artificial intelligence (AI), cloud computing, and digital transformation, Microsoft (MSFT) is a hypergrowth stock that cannot be overlooked.
Microsoft has positioned itself for long-term growth by expanding its AI infrastructure and maintaining dominance in multiple business segments.
Microsoft stock has returned more than 960% over the last decade, thanks in large part to its legacy products. So far this year, the stock is up 17.4%, far outperforming the tech-heavy Nasdaq Composite Index’s 5.7% gain. Let’s find out if it is the right time to buy this exceptional stock.
In the third quarter of its fiscal 2025, total revenue of $70.1 billion increased by 13% year over year. Diluted earnings per share climbed to $3.46, an 18% increase, exceeding Wall Street expectations. Microsoft continues to demonstrate strong operational discipline, with operating margins rising to 46%, a one-point increase year-over-year. This expansion was fueled by strong cloud and AI momentum, effective cost management, and growing customer loyalty to Microsoft platforms.
But perhaps the most notable improvement in the quarter was its commercial remaining performance obligation (RPO) of $315 billion, up 34% year over year, indicating long-term revenue visibility. The company expects to recognize 40% of that total over the next 12 months, with the remainder set aside for future years. This increases investor confidence in Microsoft’s ability to maintain growth in the coming years.
The cloud is Microsoft’s primary growth engine, accounting for 21% of the global cloud computing market, trailing only Amazon’s (AMZN) AWS. The Microsoft Cloud segment, which includes Azure, Dynamics 365, and Microsoft 365, generated $42.4 billion in revenue this quarter, representing a 20% year-over-year increase. The true star, however, is Azure, Microsoft’s flagship cloud platform. Azure and other cloud services increased revenue by 33%. This explosive growth is being driven by enterprise adoption, developer enthusiasm, and expanding use cases across industries, including healthcare, finance, manufacturing, and retail. Major corporations, including Coca-Cola (KO), ServiceNow (NOW), and Abercrombie & Fitch (ANF), are expanding their Azure presence.