MSFT
Microsoft Corporation
Technology · Software - Infrastructure · United States · Stock
Theme Exposure
Score Breakdown
Scored for Dividend Income profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- Microsoft earned perfect scores in both profitability and financial health, reflecting a 36.1% net margin, 45.6% operating margin, and a debt-to-equity ratio of just 0.13, which together form a very strong foundation for the composite.
- Consistent dividend growth from $2.48 to $3.32 per share over four fiscal years, combined with a conservative 23.6% payout ratio, supported a high dividend sub-score and the Dividend Candidate label.
- Sequential quarterly revenue growth across all four recent quarters and strong year-over-year double-digit expansion contributed meaningfully to the 83.9/100 total score.
Why Not Higher
- Net income fluctuated across recent quarters — peaking at $38.5 billion in 2026Q2 and declining to $31.8 billion in 2026Q3 — which likely tempered the momentum sub-score below its maximum.
- The theme sub-score was limited under the model's current methodology despite assignment to three prominent macro themes, and year-over-year growth, while strong, fell just short of the highest scoring tier.
Data Confidence
10 / 10
Very High — full data coverage
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
From FY2024 to FY2025, revenue grew from $245,122,000,000 to $281,724,000,000 (+14.9%), net income grew from $88,136,000,000 to $101,832,000,000 (+15.5%), and diluted EPS rose from $11.80 to $13.64 (+15.6%).
The model rewarded consistent double-digit expansion across revenue, net income, and earnings per share over the same fiscal-year period, reflecting broad-based top- and bottom-line growth that falls just short of the highest scoring tier.
In FY2025, Microsoft posted a net margin of 36.1%, an operating margin of 45.6%, and a return on assets of 16.5%.
These figures indicate that the company converts a large share of revenue into both operating and net income while generating substantial returns on its asset base, which the model recognized with a perfect profitability score.
In FY2025, Microsoft carried a debt-to-equity ratio of 0.13 against total assets of $619,003,000,000.
A debt-to-equity ratio of 0.13 in FY2025 signals a very conservatively leveraged balance sheet relative to the company's massive asset base, which the model rewarded with a perfect financial health score.
Revenue rose sequentially across the last four reported quarters: $76,441,000,000 in 2025Q4, $77,673,000,000 in 2026Q1, $81,273,000,000 in 2026Q2, and $82,886,000,000 in 2026Q3. Operating income similarly trended upward from $34,323,000,000 in 2025Q4 to $37,961,000,000, $38,275,000,000, and $38,398,000,000 in the subsequent three quarters. Net income showed more variability, rising from $27,233,000,000 in 2025Q4 to a peak of $38,458,000,000 in 2026Q2 before declining to $31,778,000,000 in 2026Q3.
The model rewarded the consistent sequential growth in revenue and operating income, while the net income fluctuation across the same period likely tempered the score slightly below the maximum.
Dividends per share have increased every year from $2.48 in FY2022 to $2.72 in FY2023, $3.00 in FY2024, and $3.32 in FY2025, while the dividend payout ratio in FY2025 stood at 23.6%.
The model rewarded a consistent multi-year dividend growth track record alongside a conservative payout ratio in FY2025 that leaves substantial earnings retained, reflecting both shareholder return commitment and financial flexibility.
Microsoft is assigned to the macro themes of AI Infrastructure, Data Centers & Cloud Infrastructure, and Enterprise AI Software.
Although the company is assigned to three high-profile and currently tracked macro themes, this assignment did not fully translate into a higher theme sub-score under the model's current methodology.
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
Microsoft delivered strong double-digit growth in FY2025, with revenue rising 14.9% to $281.7 billion and net income climbing 15.5% to $101.8 billion, while posting a near-perfect profitability profile including a 36.1% net margin and 45.6% operating margin. The balance sheet remains exceptionally conservative with a debt-to-equity ratio of just 0.13 against total assets of $619 billion, and quarterly revenue has grown sequentially for four consecutive quarters reaching $82.9 billion in 2026Q3. The company has also demonstrated consistent dividend growth, raising dividends per share every year from $2.48 in FY2022 to $3.32 in FY2025, all while retaining the vast majority of earnings with a payout ratio of just 23.6%. These attributes collectively earned a composite score of 83.9/100 with a Very Low risk rating and a Dividend Candidate label.
Plain English
Microsoft is a massive, highly profitable company that keeps growing its revenue and profits every year, barely carries any debt, and steadily raises its dividend — making it look like a reliable, lower-risk investment based on its financial filings.
Bull Case vs. Bear Case
Bull Case
- Revenue, net income, and diluted EPS all grew at roughly 15% year-over-year in FY2025, demonstrating broad-based top- and bottom-line momentum that has continued into recent quarters with sequential revenue gains through 2026Q3.
- Microsoft's FY2025 profitability is exceptional, with a 45.6% operating margin and 36.1% net margin, meaning the company converts an unusually large share of every revenue dollar into profit.
- The dividend has been raised every year from $2.48 in FY2022 to $3.32 in FY2025, and with a payout ratio of only 23.6%, there is substantial room for continued dividend growth without straining earnings.
Bear Case
- Net income showed meaningful variability in recent quarters, rising to $38.5 billion in 2026Q2 before declining to $31.8 billion in 2026Q3, suggesting bottom-line results are not as smoothly predictable as top-line revenue trends.
- The theme sub-score did not fully translate into a higher composite score despite assignment to three high-profile macro themes — AI Infrastructure, Data Centers & Cloud Infrastructure, and Enterprise AI Software — indicating the model's current methodology did not reward theme exposure as heavily as other factors.
- Growth, while strong at roughly 15% year-over-year, fell just short of the highest scoring tier, meaning there is a ceiling on how much the growth factor alone can lift the composite score.
What Could Change the Picture
Bullish Triggers
- A sustained re-acceleration of net income growth in line with operating income trends — which have risen steadily from $34.3 billion in 2025Q4 to $38.4 billion in 2026Q3 — would strengthen confidence in bottom-line consistency.
- If the model's theme methodology were updated to more fully reward exposure to AI Infrastructure, Data Centers & Cloud Infrastructure, and Enterprise AI Software, Microsoft's composite score could move meaningfully higher.
Bearish Triggers
- Continued net income volatility across quarters, as seen between 2026Q2 and 2026Q3, could signal margin pressures or one-time items that erode the otherwise pristine profitability picture.
- Any deterioration in the debt-to-equity ratio from its current very low level of 0.13 — for example from large capital commitments — could weaken the perfect financial health score that currently anchors the composite.
Risk Profile
Very Low RiskMicrosoft carries a very conservative debt-to-equity ratio of 0.13 against a total asset base of $619 billion, indicating minimal financial leverage risk. While quarterly revenue and operating income have trended steadily upward, net income showed some variability in recent quarters, which is a factor to monitor but does not materially alter the overall Very Low risk rating.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.