Microsoft Reports Strong Q2 2025 Results, Driven by Cloud and AI Growth
Microsoft (MSFT) announced strong financial results for the second quarter of its fiscal year 2025, which beat estimates, demonstrating significant growth in its cloud and artificial intelligence (AI) segments. Compared to the same quarter last year, the company saw double-digit increases in revenue, operating income, and net earnings.
Total revenue reached $69.6 billion ($68.87B estimate), marking a 12% year-over-year (YoY) increase (last year’s revenue was $62.02B)
Operating income grew 17% YoY to $31.7 billion
Net income rose 10% YoY to $24.1 billion
Diluted earnings per share (EPS) increased 10% YoY to $3.23 ($3.11 was the estimate)
AI and Cloud Continue to Drive Growth
Microsoft's AI and cloud initiatives continue to be major contributors to its success. CEO Satya Nadella highlighted the company’s AI momentum, stating:
“We are innovating across our tech stack and helping customers unlock the full ROI of AI to capture the massive opportunity ahead. Already, our AI business has surpassed an annual revenue run rate of $13 billion, up 175% year-over-year.”
Microsoft Cloud generated $40.9 billion in revenue, reflecting 21% growth YoY, according to CFO Amy Hood, who emphasized the company’s focus on balancing investment and efficiency in cloud and AI infrastructure.
Business Segment Performance
Microsoft’s financial performance was fueled by growth across its key business divisions:
Productivity and Business Processes – $29.4 Billion (+14%)
Microsoft 365 Commercial revenue grew 15%, with cloud revenue within the segment rising 16%
Consumer revenue for Microsoft 365 expanded 8%
LinkedIn revenue increased 9%
Dynamics product and cloud revenue climbed 15%, with Dynamics 365 revenue surging 19%
Intelligent Cloud – $25.5 Billion (+19%)
Server and cloud services revenue rose 21%, largely driven by Azure’s 31% revenue growth
More Personal Computing – $14.7 Billion (Flat YoY)
Windows OEM and devices revenue saw a 4% increase
Xbox content and services revenue ticked up 2%
Search and news advertising revenue, excluding traffic acquisition costs, jumped 21%
Capital Returns to Shareholders
Microsoft continued its commitment to returning capital to investors, repurchasing shares and distributing dividends totaling $9.7 billion during the quarter.
Valuation: What Is MSFT’s P/E Ratio Now?
In the last year, MSFT generated $12.42 in adjusted EPS. At the current share price of $434 (in after-hours trading), this gives it a P/E ratio of 34.9x.
You can use our free valuation calculators to help you determine if MSFT stock is undervalued or overvalued.
