Microsoft Stock at Year-Ago Levels: Does Its Fundamentals Still Hold?

TradingKeyMar 5, 2025 8:55 AM

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TradingKey – Since late February, U.S. stocks have entered a correction phase, with cloud giant Microsoft (MSFT.US) retreating to year-ago levels. Analysts argue that the current share price fails to reflect the company’s still-robust fundamentals.

Year-to-date in 2025, Microsoft shares have declined 7.80%, recently trading at $388.61—near its lowest level in the past year.

Undervalued Amid Macro Noise

In a March 4 report, Evercore noted that Microsoft’s current valuation prices in macro-related fears while overlooking fundamental strengths. Analysts emphasized the company’s ability to capitalize on surging enterprise demand for AI services across applications and infrastructure, with the run rate for AI growing at a 100%-plus rate and nearing $13 billion.

Despite a slight deceleration in Azure cloud growth last quarter, Microsoft continues to gain market share in the hyperscale cloud sector against rivals. Evercore reiterated its Outperform rating with a $500 price target.

Long-Term Drivers Intact

Goldman Sachs acknowledged recent reports of potential delays or cancellations in some AI data center leases but expects Microsoft’s capital expenditures to remain substantial.

The firm highlighted Microsoft’s positioning to capture long-term trends, including generative AI, public cloud adoption, and SaaS expansion.

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