One-glance verdict
Overvalued
$270.32 our estimate vs market $517.53
Wall Street consensus: $578.82 (114.1% higher than our fair-value estimate)
91% above our estimate, beyond the bull case
Fundamentals snapshot
Microsoft Corporation
MSFT · NMS · Technology · Software - Infrastructure
Current price
$517.53
52-week range
$349.20 - $553.72
Market cap
$3.84T
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 known for its Windows operating system, Office software, and Xbox gaming consoles. A large and growing portion of its income now comes from cloud computing (renting out its powerful computer network to other businesses) and software subscriptions. This focus on subscriptions creates reliable recurring revenue (money that comes in predictably on a regular basis, like a magazine subscription), which is more stable than one-time product sales.
How the company got here
Founded in 1975 by Bill Gates and Paul Allen, Microsoft's first product was a programming language for one of the earliest personal computers. A key turning point was a 1980s deal with IBM to provide the operating system for its computers, which established Microsoft's dominance. The launch of Windows in 1985 and the Microsoft Office suite of products like Word and Excel further solidified its position as a software giant. More recently, under CEO Satya Nadella, the company has successfully shifted its focus to cloud computing and subscription-based services, making it a major player in the modern tech landscape.
What it actually does
Microsoft is a technology company that creates a wide range of software, hardware, and services for both individuals and businesses. Many people are familiar with their Windows operating system, the Microsoft 365 suite which includes programs like Word, Excel, and PowerPoint, and the Xbox gaming console. The company also operates the professional networking site LinkedIn, the Bing search engine, and sells its own line of Surface computers and accessories. A huge and growing part of their business is providing cloud computing services (the digital infrastructure that powers many websites and online services) through a platform called Azure.
Productivity and Business Processes
This is Microsoft's largest business segment and includes many of its most well-known software products for both companies and individuals. Businesses pay subscription fees for access to Microsoft 365, which includes not just Office apps but also collaboration tools like Teams and professional social networking through LinkedIn. This segment also offers business management software called Dynamics 365. For individuals, this includes subscriptions to Microsoft 365 for personal or family use. This part of the company generates a very large portion of Microsoft's total revenue through these recurring subscriptions.
Intelligent Cloud
This is Microsoft's fastest-growing and highly profitable segment, centered around its cloud computing platform, Azure. Instead of buying and managing their own physical servers, businesses 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 SQL Server for managing databases, and GitHub, a platform for software developers. The revenue here is largely based on how much of these cloud services customers use, similar to a utility bill.
More Personal Computing
This segment contains many of the products and services that consumers are most familiar with. It includes the revenue Microsoft earns from its Windows operating system, which is pre-installed on most new personal computers. This is also where the company's gaming business, including Xbox consoles, game sales, and subscription services like Game Pass, is housed. Additionally, this segment includes advertising revenue from the Bing search engine and sales of Microsoft's own hardware devices, such as Surface tablets and laptops.
What management is betting on now
Microsoft's current major focus is on artificial intelligence (AI), integrating it across all of its products and services. A key part of this strategy is Copilot, an AI assistant that is being added to products like Windows, Microsoft 365, and their cloud platform to make users more productive. The company is also investing heavily in expanding its Azure cloud infrastructure to support the massive computing power needed for AI development and applications. This big bet on AI is aimed at driving future growth by making their software and cloud services more intelligent and indispensable to both businesses and individuals.
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 $270.32 vs current price $517.53
Wall Street consensus is the average analyst price target: $578.82 (114.1% higher than our fair-value estimate).
Our most-likely fair value is $270.32 a share — about 47.8% below today's price of $517.53, 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)
28.58x
Forward P/E
21.89x
P/B
8.69x
P/S
11.58x
EV/EBITDA
20.05x
PEG ratio
1.67x
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
18.11
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
0.8%
Payout ratio
19.8%
Last ex-div date
2026-11-19