Microsoft Q1 FY6/26 Earnings Review.
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Sheesh.
by Alex King, CEO, Cestrian Capital Research, Inc.
Microsoft ($MSFT) reported its fiscal Q1 (their financial year ends 30 June 2026) today after the close. In an environment where I think everyone is looking for the show-me answer to all this capex spending, Microsoft delivered.
Here’s the headline numbers.
Summary Fundamentals
Let's recap.
- Revenue growth accelerated to +18.4% YoY for the quarter and +15.6% on a TTM vs. prior year TTM basis. Bear in mind this is a company with almost $300bn of TTM revenue so these growth numbers are truly remarkable.
- TTM EBITDA margins ticked up further to +64%.
- Unlevered pretax FCF margins - that’s after capex - ticked up to 38%. That’s a comparable level of cashflow margin to 2018-2019 when the company’s capex was half the % of revenue it is today. Remarkable.
- The balance sheet strengthened further to $70bn net cash.
- You can see this below in the full numbers but also remarkable is that remaining performance obligation - the order book - grew >50% year on year to a total of $392bn, representing some 1.3x TTM revenue.
This company is in great shape. The stock will do what the stock does - when the market rolls over so too will $MSFT - but the actual business? Incredibly strong and, I believe, well managed vs. its hyperscaler peers.
MSFT vs. Peers - TTM Capex % TTM Revenue
META looks out of control, it should be said, with the drunken-sailor spending.
Valuation
I do not believe this is a big price for this company in this market.
Stock Chart And Price Outlook
Here’s how the chart looks to my eyes. You can open a full page version, here.
The key level the stock has to hold tomorrow is $521, which is the 21-day EMA (green line). Below that and it can fall significantly further. Above that, bullish with a target between $598-659.
Here's the medium term chart. You can reach the full page version here.
Appendix: Detailed Fundamentals
We've had the stock at Distribute since August 1st when it entered our bull target termination zone. With solid numbers and a direction yet to be determined following earnings, we now rate the stock as Do Nothing.
Cestrian Capital Research, Inc - 29 October 2025.
DISCLOSURE: Cestrian Capital Research, Inc staff personal accounts hold long position(s) in $MSFT.