How High Can Microsoft's and Alphabet's Margins Go?

On Tuesday, April 27, large-cap tech giants Microsoft (NASDAQ: MSFT) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) each reported first-quarter earnings. While Alphabet stock surged and Microsoft shares fell slightly after the release, both companies posted impressive growth metrics.

As companies become larger, it often becomes harder for them to grow as fast as they did in the past. Yet Alphabet and Microsoft, helped along by their cloud computing divisions, managed to post eye-opening 34% and 19% revenue growth rates, respectively.

Despite both companies being well-known entities among investors, it's quite possible they are actually still being underrated. That's due to another factor besides mere revenue growth -- and that factor is margin expansion.

Source Fool.com