Microsoft’s Strengths
Microsoft has recently proven to be a remarkable outperformer within the “Magnificent 7” (Mag 7), a group of leading technology companies that includes Amazon, Apple, Alphabet, Meta Platforms, and Tesla. This development is of particular interest to investors, as it can have significant implications for the technology sector and the overall market.
Cloud Business
Microsoft’s cloud division, particularly Azure, demonstrated impressive growth figures in the last quarter. Azure recorded a growth of 33% compared to the previous year, representing the fastest growth among major cloud providers. Artificial intelligence (AI) contributed 12 percentage points to this growth.
Financial Performance
The Intelligent Cloud segment of Microsoft generated revenues of $26.8 billion in the last quarter, marking a 21% increase year-over-year. The operating income reached $11.1 billion.
Market Position
Microsoft’s stock has emerged as the best performer within the Mag 7 in recent months. It holds the highest Zacks Rank in the group with a Zacks Rank of #2 (Buy).
Comparison with Other Mag 7 Companies
While Amazon Web Services (AWS) remains the largest cloud provider, it recorded a growth of only 17%, marking the slowest growth in the last five quarters. AWS remains highly profitable with an operating margin of 39.5%, but the slowed growth raises questions about whether AWS is losing growth momentum.
Microsoft’s ability to stand out through AI-driven services and strong cloud presence makes it an attractive investment compared to other Mag 7 companies.
Outlook and Investment Strategies
Microsoft has provided optimistic forecasts for the fourth quarter of 2025, which are expected to benefit from AI-driven momentum. In a time when the Mag 7 account for a significant portion of the S&P 500 returns, investors are looking for strategies to reduce concentration on these few stocks. Active expansion strategies aiming at long-term capital appreciation could be a way to diversify risk.
In summary, Microsoft shows impressive development, making it an attractive investment within the Mag 7. Its strong cloud presence and ability to stand out through AI-driven services make it an important player in the technology sector.