Assumptions
- Where do you think revenue will be in 5 years time? and why?
📊 Where Could MSFT’s Revenue Be in 5 Years?
As of FY2023, Microsoft's revenue was $232 billion, with an average 5-year CAGR (Compound Annual Growth Rate) of about 13–14%.Assuming a conservative CAGR of 10–12%, here’s a rough projection:- FY2028 Estimate (at 10% CAGR): ~$374 billion
- FY2028 Estimate (at 12% CAGR): ~$408 billion
- Aggressive case (15% CAGR): ~$467 billion
🔍 Why Microsoft’s Revenue Will Likely Keep Growing
- Cloud Domination (Azure): Azure is the second-largest cloud platform (after AWS) and growing fast. As more businesses migrate to the cloud and embrace hybrid solutions, Azure’s revenue is expected to continue climbing—especially with AI integrated deeply into its services.
- AI Integration Across Products: Microsoft is embedding AI (via OpenAI and its own models) into products like Office (Copilot), Windows, Azure, and GitHub (Copilot for devs). These are not just features—they’re revenue multipliers, likely to drive premium pricing and upsells.
- Gaming & Activision Acquisition: The $69 billion Activision deal expands Microsoft's gaming empire significantly, giving it a larger piece of the console and cloud gaming market. Game Pass + content = long-term monetization.
- Recurring Revenue Model: A massive portion of Microsoft’s revenue comes from subscriptions (Office 365, Azure, Dynamics, etc.), making growth sticky and predictable. This base gives it room to scale without starting from scratch.
- Enterprise & Government Contracts: Microsoft continues to land multi-billion-dollar deals with governments and enterprises globally. Its integrated ecosystem makes switching costs high, ensuring customer retention.
⚠️ Risks to Watch
- Regulatory pressures, especially in AI and cloud services
- Cloud pricing wars (with AWS, Google Cloud)
- Geopolitical risks tied to international markets
- AI competition from open-source and other SaaS players
How well do narratives help inform your perspective?
Disclaimer
The user BB1 has a position in NasdaqGS:MSFT. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
