Microsoft (MSFT) is the world’s largest software company, generating over USD 200bn in annual revenue in fiscal 2023. Operating in over 190 countries, the company is a market leader across numerous software categories, with core solutions including cloud computing infrastructure (Azure), productivity applications (Office and Office 365), operating systems (Windows), business applications (Dynamics), internet services (LinkedIn, Bing), database software (SQL Server), gaming (Xbox), devices (Surface), and other products and services addressing enterprise and consumer technology markets.
MSFT has emerged as a leading provider of public and hybrid cloud solutions to enterprise, small, and midsize businesses, and to government customers worldwide. The transition to the cloud for its Office and Server and Tools franchises should continue to have significant benefits over time by driving higher lifetime value. MSFT also appears best positioned to capitalize on AI developments and beyond.
The company reported cash and short-term investments of USD 143bn during the last reporting quarter, versus about USD 46bn of debt, excluding operating leases. On M&A, Microsoft utilized USD 25.8bn in commercial paper to partially fund the USD 69bn Activision Blizzard acquisition. MSFT merits a stable issuer credit outlook. Risk factors include any softness in transactional revenue (Windows).
As one the very few US corporation, Microsoft’s is solidly anchored at the AAA level.