Builds the cloud, AI, and productivity platforms that businesses run on — from Windows and Microsoft 365 to Azure and Copilot.
★★★★★
★★★★★
Growing
What Microsoft does
Microsoft builds the cloud, AI, and productivity platforms that businesses run on — from Windows and Microsoft 365 to Azure and Copilot.
Founded
1975
Redmond, Washington
CEO
Satya Nadella
Since 2014
Market cap
$3.58T
#4 in the world
Revenue (FY25)
$281.7B
+15% YoY
30-Second Summary
A plain-English explanation of Microsoft's business model
If you only remember one thing
Microsoft earns most of its money from subscriptions and cloud consumption rather than one-time software sales — led by Azure, Microsoft 365, and a fast-growing AI business built around Copilot and its partnership with OpenAI. Its biggest advantage is how deeply its software is already embedded in how businesses operate, which makes switching providers slow, expensive, and disruptive.
Business Segments
Where Microsoft's $281.7B Fiscal year 2025 (ended June 30, 2025) comes from
$281.7B
Fiscal year 2025
42.9% of revenue ·+13% YoY
37.7% of revenue ·+21% YoY
19.4% of revenue ·+7.5% YoY
Intelligent Cloud is growing more than 1.5x faster than Productivity and Business Processes, driven mainly by Azure — and it's steadily closing the gap on becoming Microsoft's largest segment.
Fiscal year 2025 (ended June 30, 2025). Intelligent Cloud includes Azure, server products, and enterprise services; More Personal Computing includes Windows, Gaming, Surface, and Search advertising. In August 2024 Microsoft restructured its segments, moving commercial Microsoft 365 into Productivity and Business Processes.
Business Model
How Microsoft makes money — the ecosystem flywheel
License & Subscribe
Use Cloud, Data & AI
Strengths & Risks
What makes Microsoft strong — and what could go wrong
Enterprise entrenchment
Deeply embedded in how large organizations already operate
Bundled ecosystem
Windows, Microsoft 365, Azure, and Teams reinforce each other
Cloud scale
Azure is one of the world's largest cloud infrastructure platforms
Recurring revenue
Subscriptions and cloud consumption replace one-time software sales
Balance sheet strength
Strong cash generation funds AI investment, buybacks, and dividends
Falling free cash flow
Financial Overview
Fiscal year 2025 (ended June 30, 2025)
$281.7B
+15% YoY
vs. $245.1B in FY24
$101.8B
+16% YoY
36.1% margin
$71.6B
-3.4% YoY
25.4% margin
Free cash flow slipped even as revenue and net income grew — capital expenditures on AI infrastructure have nearly tripled since FY2022, and that gap is the number to watch if the AI buildout doesn't pay off as fast as the spending is growing.
Financial History
5-year trend, fiscal years 2021–2025
$281.7B
+67.6% since FY21
Business Ecosystem
Who Microsoft depends on — and who depends on Microsoft
NVIDIA
Primary GPU supplier powering Azure's AI infrastructure
AMD
Supplies CPUs and AI accelerators for Microsoft's datacenters
OpenAI
Strategic AI partner, not a vendor — Microsoft holds roughly a 27% stake (~$135B) and exclusive rights to OpenAI's models for products through 2032
Microsoft
The platform
Competitors
Companies that compete with Microsoft across cloud infrastructure, productivity software, and AI. Market cap shown relative to Microsoft's $3.58T.
Amazon
$2.99T
Direct rival — AWS remains the largest cloud provider and competes head-on with Azure for enterprise workloads
Alphabet
$4.55T
Closest rival — competes directly in cloud (Google Cloud vs Azure), productivity (Workspace vs Microsoft 365), and frontier AI (Gemini vs Copilot)
Apple
$4.5T
Different arena — minimal overlap, since Microsoft has almost no consumer hardware business
