Microsoft's AI services, like the MU model, are expected to boost Azure's growth momentum

From Nasdaq: 2025-06-26 11:31:00

Microsoft has been enhancing its Azure platform and AI services to meet the demand for intelligent tools. In Q3 FY2025, over 10,000 organizations used Agent Service, creating 1 million custom agents. The MU language model powers the new AI agent in Windows 11 Settings, showcasing Microsoft’s AI integration.

The launch of the MU model in Windows is expected to boost Azure’s AI tools usage. Microsoft’s Intelligent Cloud segment generated $26.8 billion in Q3 FY2025, with Azure and AI services contributing significantly to the growth. The estimate for FY2025 Intelligent Cloud revenues is $105.3 billion, reflecting a 20.4% increase year over year.

Microsoft faces competition from Amazon and Alphabet in the agentic AI space. Amazon’s AWS offers tools like Agents for Bedrock and AWS App Studio, while Alphabet’s Google Cloud provides Agent Builder. These platforms enhance agent development for real-world applications, challenging Microsoft’s AI offerings.

Microsoft’s shares have gained 17.7% YTD, outperforming the industry. With a forward Price/Sales ratio of 11.70X, MSFT has a Value Score of D. The consensus estimate for Q4 FY2025 earnings is $3.35 per share, showing 13.56% growth year over year. For FY2025, the estimated earnings per share are $13.36, indicating 13.22% growth.

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Read more at Nasdaq: Will Microsoft’s AI Services Help Maintain Its Cloud Growth Momentum?