Microsoft vs. Automatic Data Processing: Scale vs. Seasonality in Revenue
Key Points
Microsoft currently displays a significantly larger revenue scale and a more consistent upward trajectory compared to Automatic Data Processing.
Over the last eight quarters, Microsoft has shown continuous quarter-over-quarter revenue expansion, while Automatic Data Processing has experienced a more volatile pattern with recurring periodic peaks and dips.
Investors should watch whether the revenue gap between the two companies continues to widen rapidly in upcoming quarters.
- 10 stocks we like better than Microsoft ›
Some investors like to consider the relative size of a company’s revenue to determine its long-term growth potential. But in the case of Microsoft (NASDAQ:MSFT) and Automatic Data Processing (NASDAQ:ADP), sometimes size doesn’t mean much.
Despite Microsoft’s massive scale and revenue, it is growing revenue at a much higher rate than Automatic Data Processing. Here’s a comparison of these two companies, their recent revenue trajectory, and why Microsoft might be the better growth stock to hold for the long term.
Microsoft: Steadily Climbing Revenue Trajectory
Microsoft primarily generates revenue by selling software, cloud computing infrastructure, and personal computing devices to global customers. Revenue has consistently grown at a mid-teens rate over the past eight quarters.
It reported a net income margin of approximately 40% for the quarter ended June 30, 2026.
Automatic Data Processing: Navigating Seasonal Fluctuations
Automatic Data Processing primarily earns revenue from cloud-based human resources software and specialized employer outsourcing services. Its quarterly revenue has been more inconsistent than Microsoft’s, but on a year-over-year basis, it has consistently grown at a mid-single-digit rate over the past eight quarters.
It introduced its Canada Pay Insights tool to track wage growth and reported a net profit margin of about 18% for the quarter ended June 30, 2026.
Why Revenue Matters for Retail Investors
Revenue is the most fundamental measure of a company’s performance. Beyond reporting how much monetary value it received for goods and services over a certain period, changes in revenue over time reveal the company’s ability to expand into new markets and compete against rivals.
Quarterly Revenue for Microsoft and Automatic Data Processing
| Quarter (Period End) | Microsoft Revenue | Automatic Data Processing Revenue |
|---|---|---|
| Q3 2024 (Sept. 2024) | $65.6 billion | $4.8 billion |
| Q4 2024 (Dec. 2024) | $69.6 billion | $5.0 billion |
| Q1 2025 (March 2025) | $70.1 billion | $5.6 billion |
| Q2 2025 (June 2025) | $76.4 billion | $5.1 billion |
| Q3 2025 (Sept. 2025) | $77.7 billion | $5.2 billion |
| Q4 2025 (Dec. 2025) | $81.3 billion | $5.4 billion |
| Q1 2026 (March 2026) | $82.9 billion | $5.9 billion |
| Q2 2026 (June 2026) | $90.0 billion | $5.5 billion |
Data source: Company filings. Data as of July 31, 2026.
Foolish Take
It might be asking a tall order for Automatic Data Processing to narrow the revenue gap with Microsoft. The software giant operates one of the leading cloud service platforms for enterprises, has millions of users of its productivity software, and continues to see substantial demand for AI tools.
Microsoft’s annual revenue hit $388 billion in its recently ended fiscal year in June. The 18% year-over-year increase was driven by a 43% increase in Azure cloud revenue. Its Copilot assistant now has over 30 million paid seats, or licensed users, showing growing adoption in the enterprise market.
Microsoft is positioned as the face of AI for businesses, which could power its revenue higher in the long run. Meanwhile, Automatic Data Processing posted a 6.7% year-over-year increase in trailing-12-month revenue. Its AI-driven services platform, The Zone, has seen rapid adoption, with client retention remaining high at 92% in the recent fiscal year.
Still, AI offerings are not showing a meaningful lift to ADP’s revenue growth. Investors will want to watch how AI continues to drive Microsoft’s revenue higher and whether the gap between the companies widens. Large tech companies like Microsoft that own the infrastructure for AI, including data centers and chips, and can monetize it through consumer and business services, are in a strong position for long-term growth.
Should you buy stock in Microsoft right now?
Before you buy stock in Microsoft, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Microsoft wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $400,155!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,345,502!*
Now, it’s worth noting Stock Advisor’s total average return is 955% — a market-crushing outperformance compared to 214% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of August 6, 2026.
John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool has a disclosure policy.
Recommended Articles
