Tech sell-off causes Microsoft stock to drop, but higher revenues prompt optimism for potential growth

From Nasdaq: 2025-04-01 08:45:00

On Mar. 31, 2025, technology stocks, including Microsoft Corporation (MSFT), experienced a sell-off. MSFT was down 1.36% and 12.5% year-to-date, underperforming the NASDAQ. Despite higher revenue and earnings, MSFT shares hit January 2024 levels, prompting speculation about buying opportunities.

In its second-quarter earnings report for the 2025 fiscal year, Microsoft reported a 12% year-over-year revenue increase to $69.6 billion. Analysts are optimistic about potential growth, especially with the upcoming phase-out of Windows 10 support in October 2025, potentially driving an upgrade cycle.

Microsoft delivered non-GAAP earnings per share of $3.23, a 10% increase from the previous year. The company expects slower growth in the third quarter but remains confident in generating double-digit revenue gains. With a profit margin of over 35%, MSFT’s aggressive capital expenditure plans in AI shouldn’t impact its bottom line significantly.

MSFT stock is trading at a trailing 12-month P/E ratio of 30.50, above its historical average of 23.5x but discounted from recent years. The RSI indicates oversold conditions, and analysts are becoming increasingly bullish, with price targets suggesting significant upside potential ahead of earnings.



Read more at Nasdaq:: Tech Sell-Off Makes Microsoft Stock Look Like a Steal