Moody's Keeps Top Rating for Microsoft Amid AI-Driven Growth

Moody's Ratings has reaffirmed Microsoft Corporation's (no ticker mentioned) Aaa senior unsecured ratings and issuer rating, as well as its P-1 rating for commercial paper program. The stable outlook reflects Moody's expectation of strong operating profit growth over the next 12 to 24 months, maintaining robust cash balances, and total debt to EBITDA trending towards 1x.

The Aaa rating reflects Microsoft's substantial operating scale, strong profitability, highly diversified business profile, and leading market positions across its core businesses. The company is well-positioned to capitalize on AI-driven opportunities through its strategic relationship with OpenAI and its broad portfolio of infrastructure, platform development, and application software offerings.

Moody's expects Microsoft's revenue to grow by about 18% to 19% over the next 12 to 24 months, reaching approximately $466 billion in the fiscal year ending June 2028. This growth is driven by expansion in Azure cloud services and Microsoft 365 commercial offerings. However, operating margins are expected to decline modestly due to the increasing contribution of Azure cloud services, which carry lower gross margins.