Tech giant Microsoft (NASDAQ:MSFT) announced better-than-expected revenue in Q1 CY2025, with sales up 13.3% year on year to $70.07 billion. Its GAAP profit of $3.46 per share was 7.6% above analysts’ consensus estimates.

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Microsoft (MSFT) Q1 CY2025 Highlights:

Revenue Growth

Microsoft proves that huge, scaled companies can still grow quickly. The company’s revenue base of $138.7 billion five years ago has nearly doubled to $270 billion in the last year, translating into an exceptional 14.3% annualized growth rate.

In light of its big tech peers, however, Microsoft’s growth trailed Amazon (17.9%), Alphabet (16.6%), and Apple (8.1%) over the same period. Comparing the four is relevant because investors often pit them against each other to derive their valuations. With these benchmarks in mind, we think Microsoft’s price is fair.

Long-term growth reigns supreme in fundamentals, but for big tech companies, a half-decade historical view may miss emerging trends in AI. Microsoft’s annualized revenue growth of 14% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong.

This quarter, Microsoft reported year-on-year revenue growth of 13.3%, and its $70.07 billion of revenue exceeded Wall Street’s estimates by 2.4%. Looking ahead, sell-side analysts expect revenue to grow 12% over the next 12 months, a slight deceleration versus the last two years. This projection is still healthy and illustrates the market sees some success for its newer products.

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