Microsoft Corporation
Microsoft Corporation develops and supports software, services, devices, and solutions worldwide. The Productivity and Business Processes segment offers Microsoft 365 commercial, enterprise mobility + security, windows commercial, power BI, exchange, sharepoint, Microsoft teams, security and compliance, and copilot; Microsoft 365 commercial products, such as Windows commercial on-premises and office licensed services; Microsoft 365 consumer products and cloud services, including Microsoft 365 consumer subscriptions, office licensed on-premises, and other consumer services; LinkedIn; dynamics products and cloud services, such as dynamics 365, cloud-based applications, and on-premises ERP and CRM applications. Its Intelligent Cloud segment provides Server products and cloud services comprising Azure and other cloud services, GitHub, Nuance Healthcare, virtual desktop offerings, and other cloud services; server products, including SQL and windows server, visual studio and system center related client access licenses, and other on-premises offerings; enterprise and partner services, such as enterprise support and nuance professional services, industry solutions, Microsoft partner network, and learning experience. The Personal Computing segment provides windows and devices, such as Windows OEM licensing and devices and surface and PC accessories; gaming services and solutions, such as Xbox hardware, content, and services, first- and third-party content Xbox game pass, subscriptions, and cloud gaming, advertising, and other cloud services; search and news advertising services. It sells its products through OEMs, distributors, and resellers; and online and retail stores. The company has a strategic collaboration with Mayo Clinic, Inc. for the development of a frontier AI model for healthcare; and Global Objects, Inc. to build a retrieval-grounded generative AI world model. The company was founded in 1975 and is headquartered in Redmond, Washington.
What does it do?
Microsoft makes the software that runs much of the world's work. If you've ever used Word, Excel, or PowerPoint, you've used their products. They also run Azure, a massive network of computer servers that businesses rent instead of building their own — think of it like renting computing power the way you rent a Netflix subscription. On top of that, they own Xbox, LinkedIn, and GitHub, and they're the biggest backer of OpenAI, the company behind ChatGPT.
Microsoft is at the center of the AI gold rush — every business trying to adopt AI is essentially a potential Microsoft customer, since they've baked AI tools called Copilot into nearly every product they sell. With a market cap of nearly $3 trillion, it's one of the two or three most valuable companies on Earth, meaning big swings in its stock move the entire market. Investors are watching it as a real-time scorecard for whether AI spending by businesses is actually turning into real revenue.
How does it make money?
Microsoft makes money through three main buckets. First, Productivity and Business Processes — this includes Microsoft 365 subscriptions (like Office for businesses), LinkedIn, and Dynamics business software. Second, Intelligent Cloud — this is Azure, their cloud computing platform, which is growing fast and competing directly with Amazon AWS. Third, More Personal Computing — this covers Windows, Xbox, and Surface devices. Total revenue hit $281.7 billion last year, up from $245.1 billion the year before, a jump of about 15%. Net income — the money left after all costs — was a remarkable $101.8 billion, meaning roughly 36 cents of every dollar in revenue became profit.
Why do investors care?
The growth story is simple: every company in the world is trying to use AI, and Microsoft has positioned itself as the tollbooth. By embedding AI Copilot features into Teams, Word, Excel, and Azure, they can charge existing customers more without having to find new ones. Azure is growing at double-digit rates and taking share in the cloud market, which is still expanding rapidly. For the thesis to work, businesses need to keep spending on AI tools and cloud infrastructure — and so far, the data suggests they are.
Deep Dive
MemberA full investor briefing on Microsoft Corporation — history, leadership, risks, and outlook.