23
September 2025
Microsoft Corporation
Pierre Muller
Equity Analyst, PSG Wealth
- Analyst thesis Our recommendation is based on:
- Microsoft Azure is benefiting from the rapid adoption of multi-cloud strategies, while Azure Local (formerly Azure Stack HCI), and Azure Arc strengthen Microsoft’s hybrid control plane across on-premises and cloud environments.
- Microsoft’s broad product range drives a strong subscription model with annuity-type revenue and customer loyalty supported by a strong moat (high switching costs, innovation, scale, network effect, and brand). This is evident in the high and stable margins it achieves over the long term.
- While Microsoft shares trade at a premium relative to peers, this valuation is supported by its superior organic revenue growth, strong free cash flow generation, and a leading cloud platform.
- Microsoft is well placed to significantly benefit from AI.