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MICROSOFT CORP (MSFT) Stock Analysis

TechnologyServices-Prepackaged Software

Q3 2026 · +18.3% revenue · +2.0% revenue
Beat the trendvs trailing 3-quarter avg
Revenue▲+0.5 ppvs trend
Net income▼−8.8 ppvs trend
Diluted EPS▼−8.8 ppvs trend
Free cash flow▼−33.3 ppvs trend

Outperformed in 1 of 4 metrics

How the cash was deployedQ3 2026
Operating cash flow$46.68B
$30.88B (66.1 %)
Share buybacks$4.63B (9.9 %)
Dividends paid$6.76B (14.5 %)
Returned to shareholders this quarter$11.38B▲ +4.0%
Last 8 quarters of revenueLatest quarter highlighted. Q4 reconstructed from the annual filing.
+18.3% +2.0%
64.73B
Q4 24*
65.58B
Q1 25
69.63B
Q2 25
70.07B
Q3 25
76.44B
Q4 25*
77.67B
Q1 26
81.27B
Q2 26
82.89B
Q3 26

* Q4 is reconstructed from the annual filing (FY − Q1 − Q2 − Q3), since the SEC does not require a Q4 10-Q.

RevenueSlowing
$82.89B
▲+18.3% ▲+2.0%
62.02B
61.86B
64.73B
65.58B
69.63B
70.07B
76.44B
77.67B
81.27B
82.89B
Still moving the same direction, but at a smaller pace than the prior quarter.
Net incomeReversal
$31.78B
▲+23.1% ▼−17.4%
21.87B
21.94B
22.04B
24.67B
24.11B
25.82B
27.23B
27.75B
38.46B
31.78B
Direction flipped this quarter — watch for a one-off or a new trend.
Free cash flowReversal
$15.80B
▼−22.1% ▲+169%
9.12B
20.96B
23.32B
19.26B
6.49B
20.30B
25.57B
25.66B
5.88B
15.80B
Direction flipped this quarter — watch for a one-off or a new trend.
Diluted Reversal
$4.27
▲+23.4% ▼−17.2%
2.93
2.94
2.94
3.30
3.23
3.46
3.65
3.72
5.16
4.27
Direction flipped this quarter — watch for a one-off or a new trend.

Margins

Gross marginSlowing
67.6 %
▼−1.1 pp ▼−0.4 pp
68.36
70.08
69.59
69.35
68.69
68.72
68.58
69.05
68.04
67.63
Still moving the same direction, but at a smaller pace than the prior quarter.
Operating marginSlowing
46.3 %
▲+0.7 pp ▼−0.8 pp
43.59
44.59
43.14
46.58
45.46
45.67
44.90
48.87
47.09
46.33
Still moving the same direction, but at a smaller pace than the prior quarter.
Net marginReversal
38.3 %
▲+1.5 pp ▼−9.0 pp
35.26
35.47
34.04
37.61
34.62
36.86
35.63
35.72
47.32
38.34
Direction flipped this quarter — watch for a one-off or a new trend.
Metric
Q3 2025Same quarter, prior year
Q2 2026Previous quarter
Q3 2026Latest quarter
YoYQoQ
Revenue$70.07B$81.27B$82.89B+18.3%+2.0%
Cost of revenue$21.92B$25.98B$26.83B+22.4%+3.3%
Gross profit$48.15B$55.30B$56.06B+16.4%+1.4%
Operating expenses—$17.02B$17.66B—+3.8%
Operating income$32.00B$38.27B$38.40B+20.0%+0.3%
Net income$25.82B$38.46B$31.78B+23.1%−17.4%
Diluted $3.46$5.16$4.27+23.4%−17.2%
Operating cash flow$37.04B$35.76B$46.68B+26.0%+30.5%
$16.75B$29.88B$30.88B+84.4%+3.3%
Free cash flow$20.30B$5.88B$15.80B−22.1%+169%
Gross margin68.7 %68.0 %67.6 %−1.1 pp−0.4 pp
Operating margin45.7 %47.1 %46.3 %+0.7 pp−0.8 pp
Net margin36.9 %47.3 %38.3 %+1.5 pp−9.0 pp