MSFT

Microsoft's FY2025 results showcase a rare combination at $2.78T scale: revenue grew 14.9% to $282B while net income outpaced it at +15.5% to $102B, proving operating leverage is intact even as the company absorbs massive AI infrastructure spend. The MD&A confirms the engine — Microsoft Cloud at $168.9B (+23%) and Azure +34% — with Server products and cloud services up 23%. Gross margin held at 68.8% and operating margin at a remarkable 45.6%, while ROE of 29.6% on a $343B equity base (+27.9% YoY) shows the capital base is compounding without dilution (shares flat YoY).

The balance sheet is a fortress: $30.2B cash (+65.1%), only $43.2B total debt, and L/E of 0.80x. Operating cash flow of $136B comfortably funded $64.6B of capex (the AI buildout the MD&A flags as margin-pressuring), $18.4B of buybacks and $24.1B of dividends — with cash still building. Management is explicit that 'investments we are making in cloud and AI infrastructure...will continue to increase our operating costs and may decrease our operating margins,' but FY2025 results refute the fear: operating income grew 17.4%, faster than revenue, despite capex +45.1%.