Microsoft is facing increasing competition in artificial intelligence, with Chinese technology companies such as DeepSeek posing a significant challenge. Their new AI model reportedly outperforms the capabilities of ChatGPT, which Microsoft is working on with OpenAI. These events led to a short-term decline of almost 5% in Microsoft shares.
Another significant external factor is the new tariffs from the US, which affect not only the cost structure but also global distribution chains. The increased cost of importing components from China is putting pressure on the company’s profit margins.
________________________________________
Advances in AI
Microsoft is systematically strengthening its position in AI, not only through direct product innovation (e.g. Microsoft 365 Copilot) but also through infrastructure platforms such as Azure AI Foundry. Adoption of these tools among enterprise customers is showing strong growth, contributing to the positive outlook in this segment.
Second Quarter 2025 Earnings
In its fiscal second quarter, Microsoft Corp (NASDAQ-MSFT) achieved year-over-year revenue growth of more than 12%, with total revenue surpassing the $70 billion mark. Operating profit rose more than 17% to $31.65 billion. These results indicate a robust fundamental performance despite the aforementioned challenges.
Estimates of share development
The analytical estimates for 2025 are in a wide range. Conservative forecasts set the target price between USD 450-460, while more optimistic models talk about a possible threshold of up to USD 635. The average expected share price during the year is around USD 569.
________________________________________
Conclusion
Microsoft Corp (NASDAQ-MSFT) remains a technology giant with high innovation potential in 2025. Although it faces challenges in the form of slowing Azure growth, international competition and geopolitical uncertainties, its financial stability and investments in AI are strong pillars for future growth. For investors, Microsoft can continue to be an attractive title with a balanced risk/reward ratio. Microsoft Corp (NASDAQ-MSFT) also pays regular quarterly dividends to its shareholders. Currently, the dividend yield is 0.86% p.a. The actual dividend amount has been approved by the AGM at $3.32 per share. The company has also disclosed the quarterly dividend payment date, which will be June 12, 2025. The last day to purchase shares using the dividend (Ex-Dividend-Date) will be May 15, 2025. According to analysts at brokerage firms and financial strategists at investment banks, the share price can be expected to rise in the short to medium term investment horizon. The average target price for the short- to medium-term investment horizon has been set at $502.00 per share.
