Microsoft shines despite minor missteps: A rock in the technology landscape

Microsoft has concluded fiscal year 2024 with its fourth-quarter report, surpassing both revenue and profit forecasts from Wall Street. Surprisingly, however, the stock recorded a slight decline. A detailed analysis of the results indicates that there are no substantial issues within Microsoft. The tech giant continues to dominate nearly all areas of modern technology—from personal and enterprise software to cloud services via Azure and popular online platforms like LinkedIn. Microsoft's revenue rose by 15% in the fourth quarter compared to the previous year, reaching $64.7 billion. Earnings per share also improved by 10% to $2.95. This is particularly remarkable for such a vast and complex company. However, a minor blemish is evident with Azure: with a growth rate of 29%, Azure slightly lagged behind the management's projections of 30% to 31%. This minimal setback could be the reason for the stock price declines. Nonetheless, management affirmed that the growth potential remains strong due to high demand for AI services in the long term. Investors should remain cautious. While Microsoft's prospects are promising, the stock remains relatively expensive with a price-earnings ratio of 35. Analysts predict an annual profit growth of 16% over the next three to five years. Even if capital investment should decrease over time, the current high valuations appear discouraging. Conclusion: Despite Microsoft's impressive performance and future outlook, investors should be patient and wait for better entry opportunities. High valuations could continue to lead to short-term stock price declines.