Microsoft Projects 42% Surge in 2025 After 2024 Underperformance

REDMOND, Wash. — Microsoft Corp. (MSFT) is poised for a significant rebound in 2025, with Evercore ISI projecting a 42% surge following a challenging end to 2024. The tech giant experienced a 7% decline in the final two weeks of 2024 and an additional 0.7% drop on the first trading day of the new year, underperforming both the S&P 500 and the iShares Expanded Tech-Software Sector ETF (IGV).

Evercore analysts, led by Kirk Materne, highlighted several factors driving Microsoft’s anticipated recovery. The company expects increased free cash flow through 2026, driven by declining capital expenditures. Additionally, Microsoft’s Azure cloud platform is projected to accelerate growth in the first half of 2025, while its AI-powered Copilot tools are expected to gain broader adoption.

Historically, Microsoft has demonstrated resilience after underperformance. Over the past four years, the company has lagged behind the S&P 500 and IGV four times, only to rebound strongly the following year. In 2024, Microsoft shares fell 12%, while the S&P 500 and IGV gained 25% and 30%, respectively. Evercore’s analysis shows that, on average, Microsoft outperformed by 22% and rose 42% on an absolute basis in the year following underperformance.

Analysts attribute Microsoft’s durability to its diverse product portfolio, consistent revenue streams, and strong financial foundation. The company’s extensive market presence and steady demand for its products are expected to fuel a