The MSFT Disconnect: Earnings Up, Stock Down (Buy?) Coppa Italia (FSxda6DIH0)
1 min readAnalysis by AlgoThesis Editorial Desk
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The story
Microsoft closed FY2025 (ending June 30, 2025) with $281.7B in revenue, up 14.9% year-over-year, alongside 68.8% gross margins and $13.64 diluted EPS — a fundamentals picture that most large-caps would envy. The stock's failure to rally on these numbers points to one of two dynamics: either the bar was already too high heading in, or macro/valuation concerns are capping upside regardless of execution.
The key tension is whether MSFT's multiple — already pricing in significant AI monetization via Copilot and Azure — leaves room for further re-rating, or whether earnings growth needs to accelerate beyond current pace to drive price. Watch Azure revenue growth rate disclosures and forward guidance revisions as the next catalysts; any deceleration in cloud would confirm the bear case, while continued 14-15%+ topline growth with margin expansion keeps the bull case alive.
The two-sided take
The house read
Two-sidedWrong ifAzure growth decelerates below 30% in the next quarterly disclosure, or a broader multiple compression in mega-cap tech from rising real rates undercuts the re-rating thesis regardless of company-specific execution.
Published read · research, not advice