Microsoft (NASDAQ:MSFT) will report earnings after the market closes Oct. 24 as the most stable, and among the cheapest, of the five Cloud Czars that now dominate the world economy. So what should Microsoft stock investors expect?

CEO Satya Nadella has used heavy investment in cloud data centers to transform the former maker of PC software and applications into a default vehicle for delivery of cloud applications. This is something he’s accomplished in less than five years and a core reason behind the renewed interest in MSFT stock.

For the quarter, Microsoft is expected to deliver 96 cents per share of earnings — about $7.5 billion — and there are hopes for $1 per share, on revenue of $27.86 billion. That’s more revenue, and more than twice the earnings, of mighty Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), which is expected to report a day later.

Microsoft, which five years ago was headed toward irrelevance under former CEO Steve Ballmer, is now hot on the trail of Apple’s (NASDAQ:AAPL) $1 trillion in market cap. Since Nadella was announced as CEO in February 2014, Microsoft’s market cap is up nearly 200%.

Microsoft Stock Is Still Cheap

Despite this, I would argue that Microsoft stock is still cheap. Its price-to-earnings ratio is listed as over 50 because it chose to defer earnings and take charges before the Trump Administration’s tax cut took effect, reporting a $6.3 billion loss in last year’s December quarter.

At its 2018 pace of earnings, Microsoft should have a P/E ratio of just 26 by the end of the year, for a company growing at over 15% per year, with a bottom line growing by $1 billion per quarter, plus a 42 cent per share dividend that was at just 28 cents when Nadella became CEO.

The power behind Microsoft stock today is no longer built on Windows or Office but its Azure cloud — a global network of data centers that has become a default platform for many corporate and consumer applications. Azure has also helped Microsoft become a hardware powerhouse, its Surface PC is now approaching the sales pace of the Apple MacBook, and its Xbox game machine in a strong second place behind the Sony (NYSE:SNE) PlayStation.

While Alphabet and Facebook (NASDAQ:FB) depend on advertising to support their clouds, Microsoft has gone up the stack to software services. It has even made peace with open source, joining the Open Invention Network

, promising not to enforce its patents against Linux and other open source projects. Microsoft has also won approval to buy Github, the largest repository for open source projects, a move that would have been unthinkable early in the decade.

Azure Power

Nadella’s most controversial move was spending $26.2 billion on LinkedIn, the professional social network, but its use for building careers and businesses now make it a boost, not a drain, on results and Nadella is tying his own pay to the unit’s performance.

Even Bing, the search engine launched in 2009 to general laughter, is showing signs of life, its market share against Google having grown 50% under Nadella, to 24%. That, and its integration with other sites like LinkedIn, gave it 27% of search engine ad revenue in the June quarter.

The Bottom Line On MSFT Stock

Microsoft made a lot of mistakes in the early years of the internet, and was late to the cloud, but it has made up for lost time, and MSFT stock has been thrust back into the minds of investors.

Microsoft’s Azure revenues are secure because software customers are making money off their deployments, and enterprises are cutting costs with them. Co-founder Bill Gates, who was said to be rescuing the company when he returned to part-time work under Nadella in 2014, is still spending a third of his time there, but in the background, working with engineers and technical strategists.

I’ve also returned, as a Microsoft stock owner, and couldn’t be happier about it.

Dana Blankenhorn is a financial and technology journalist. He is the author of a new mystery thriller, The Reluctant Detective Finds Her Family, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing, he owned shares in MSFT and AMZN.