One-glance verdict
Overvalued
$288.60 our estimate vs market $532.95
Wall Street consensus: $601.73 (108.5% higher than our fair-value estimate)
85% above our estimate, beyond the bull case
Fundamentals snapshot
Microsoft Corporation
MSFT · NMS · Technology · Software - Infrastructure
Current price
$532.95
52-week range
$349.20 - $553.72
Market cap
$3.96T
Balance sheet
Healthy
50.88x Strong cushion
Net debt $51.97B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 17.8% last year.
- Reward Returns 34.0% on equity, ahead of 33% of its peers.
- Reward Free cash flow was positive in 10/10 years.
- Risk Insider ownership is only 0.1% (peer median: 3.0%).
What this company does
Microsoft Corporation
Microsoft is a technology company making products for both work and play, including the Windows operating system, Office software, and Xbox gaming consoles. The company now earns most of its money from its Azure cloud computing services and by selling software subscriptions to businesses. This shift creates a powerful ecosystem (a network of products that work together, making it hard for customers to switch) and provides reliable recurring revenue (predictable income from customers paying regularly, like a magazine subscription).
How the company got here
Founded in 1975 by Bill Gates and Paul Allen, Microsoft's big break came when they created the operating system for IBM's first personal computer. This software, which evolved into the famous Windows operating system, became the standard for personal computers worldwide, making Microsoft a dominant force in the tech industry. The company's success grew with the creation of its Office software suite, which includes popular programs like Word and Excel. More recently, under CEO Satya Nadella, Microsoft has shifted its focus to cloud computing and artificial intelligence, becoming a major player in these rapidly growing areas.
What it actually does
Microsoft is a technology company that creates a wide variety of products and services for both individuals and businesses. Many people know Microsoft for its Windows operating system that runs on most personal computers and its Office 365 productivity suite (a subscription service that includes software like Word, Excel, and PowerPoint). The company also makes hardware like the Surface line of tablets and laptops and the Xbox gaming console. For businesses, Microsoft is a major provider of cloud computing services (storing and accessing data and programs over the internet) through its Azure platform.
Intelligent Cloud
This is Microsoft's largest and fastest-growing business segment, centered around its Azure cloud computing platform. Instead of buying and managing their own physical servers, companies pay Microsoft to use its vast network of data centers for their computing and storage needs. This segment also includes other services for businesses like data analytics and artificial intelligence tools. The primary customers are businesses of all sizes, from small startups to large corporations, who pay for the amount of cloud services they use.
Productivity and Business Processes
This segment includes Microsoft's well-known software for getting work done, both for individuals and businesses. The core of this division is Microsoft 365 (formerly Office 365), which provides subscription-based access to applications like Word, Excel, PowerPoint, and the Teams communication platform. It also includes LinkedIn, the professional social network, and Dynamics 365, a suite of business management applications. Customers range from individual consumers to large enterprises who typically pay a recurring subscription fee.
More Personal Computing
This segment is focused on products and services for consumers. It includes the Windows operating system that comes on most new personal computers, for which Microsoft is paid a licensing fee by the computer manufacturers. This division also covers the Xbox gaming console and its related content and services, like the Game Pass subscription. Additionally, it includes the company's Surface line of laptops and tablets, as well as revenue from search advertising on its Bing search engine.
What management is betting on now
Microsoft is heavily focused on artificial intelligence (AI) and is integrating it across all its products and services, most notably through its Copilot features. The company is making significant investments in its Azure cloud infrastructure to support the massive computing power needed for AI. Another key priority is expanding its gaming business, particularly through its Xbox Game Pass subscription service and the integration of its acquisition of Activision Blizzard. Finally, Microsoft continues to emphasize security, aiming to provide a secure and trusted platform for its customers in an increasingly complex digital world.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2025 Q1
$19.26B
FY2025 Q2
$6.49B
FY2025 Q3
$20.30B
FY2025 Q4
$25.57B
FY2026 Q1
$25.66B
FY2026 Q2
$5.88B
FY2026 Q3
$15.80B
FY2026 Q4
$19.64B
Revenue
$90.01B
Net income
$35.77B
Diluted EPS
4.80
Operating cash flow
$55.44B
Free cash flow
$19.64B
Fetching…
Sources
Revenue
$82.89B
Net income
$31.78B
Diluted EPS
4.27
Operating cash flow
$46.68B
Free cash flow
$15.80B
Fetching…
Sources
Revenue
$81.27B
Net income
$38.46B
Diluted EPS
5.16
Operating cash flow
$35.76B
Free cash flow
$5.88B
Fetching…
Sources
Revenue
$77.67B
Net income
$27.75B
Diluted EPS
3.72
Operating cash flow
$45.06B
Free cash flow
$25.66B
Fetching…
Sources
Revenue
$76.44B
Net income
$27.23B
Diluted EPS
3.65
Operating cash flow
$42.65B
Free cash flow
$25.57B
Fetching…
Sources
Revenue
$70.07B
Net income
$25.82B
Diluted EPS
3.46
Operating cash flow
$37.04B
Free cash flow
$20.30B
Fetching…
Sources
Revenue
$69.63B
Net income
$24.11B
Diluted EPS
3.23
Operating cash flow
$22.29B
Free cash flow
$6.49B
Fetching…
Sources
Revenue
$65.58B
Net income
$24.67B
Diluted EPS
3.30
Operating cash flow
$34.18B
Free cash flow
$19.26B
Fetching…
Sources
Is it cheap or expensive?
Fair value $288.60 vs current price $532.95
Wall Street consensus is the average analyst price target: $601.73 (108.5% higher than our fair-value estimate).
Our most-likely fair value is $288.60 a share — about 45.8% below today's price of $532.95, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Healthy
Net debt $52.0B. Interest coverage 50.9x.
Net debt
$51.97B
Interest coverage
50.88x
Microsoft Corporation's profit covers its interest bill about 50.9 times over. which is stronger than most peers shown here.
Healthy
Worse cushion
Baseline
Better cushion
MSFT
BASELINE
Microsoft Corporation
Total debt $128.81B Interest coverage 50.88x This is the baseline the peer rows are being compared against.
Total debt $120.79B Interest coverage 175.32x +245% vs MSFT Carries about 3.4x more debt cushion than MSFT.
Total debt $251.64B Interest coverage 35.17x -31% vs MSFT Carries about 1.4x less debt cushion than MSFT.
Total debt $84.34B Interest coverage 33.83x -34% vs MSFT Carries about 1.5x less debt cushion than MSFT.
Total debt $169.14B Interest coverage 4.88x -90% vs MSFT Carries about 10.4x less debt cushion than MSFT.
What you should know
The case for and against MSFT
3 Rewards
1 Risk
Rewards
-
Revenue grew 17.8% last year.
-
Returns 34.0% on equity, ahead of 33% of its peers.
-
Free cash flow was positive in 10/10 years.
Risks
-
Insider ownership is only 0.1% (peer median: 3.0%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
29.69x
Forward P/E
22.48x
P/B
8.95x
P/S
11.93x
EV/EBITDA
20.60x
PEG ratio
1.73x
Profitability
How much profit each dollar creates
Gross margin
67.9%
Operating margin
45.1%
Net margin
40.3%
ROE
34.0%
ROA
14.1%
Health
Liquidity and balance-sheet strength
Debt / equity
0.29x
Current ratio
1.23x
Quick ratio
1.10x
Total debt
$128.81B
Total cash
$76.84B
Growth
How the business has been compounding
Revenue TTM
$331.84B
Revenue 5Y CAGR
13.7%
EPS TTM
17.95
EPS 5Y CAGR
22.9%
Cash flow
How much cash the business throws off
Operating CF TTM
$182.94B
Free CF TTM
$66.99B
FCF margin
20.2%
Dividend
Shareholder payout
Yield
0.7%
Payout ratio
19.8%
Last ex-div date
2026-11-19