Microsoft stock: analysis & valuation

MSFTISIN US5949181045WKN 870747Software - InfrastructureUSAData as of Nov 10, 2026
Metrics analysis · Software - Infrastructure

Microsoft MSFT

Price 533.24 USD −2.19%Market cap 3.96 tn USD52 weeks 349.20 – 559.15
Forward P/E
22.0x
Industry 16.0x
EV/EBITDA
20.0x
Industry 20.0x
Revenue growth
18.8%
Industry 14.3%
Operating margin
49.8%
Industry 13.3%
Return on equity
34.2%
Industry 12.4%
Free cash flow yield
0.1%
Industry 3.7%

What does Microsoft do?

Microsoft develops and sells software, cloud services and devices for consumers, businesses and public institutions worldwide. Its offering ranges from operating systems and server applications through developer tools to games and hardware such as PCs, tablets and consoles. The business is divided at its core into three areas: Productivity and Business Processes with Microsoft 365, Teams, Exchange, Power BI and Copilot; the cloud division with Azure and server products; and a segment for personal computing with Windows, devices, Xbox and search advertising.

A large share of revenue comes from recurring subscriptions and licensing agreements with enterprise customers, which strengthens customer retention. In competition, Microsoft is among the largest providers of cloud infrastructure alongside Amazon Web Services and Google Cloud. In office and collaboration software, the company holds a dominant position. The close integration of applications, cloud, security solutions and artificial intelligence allows it to bundle products and expand existing customer relationships.

Score profile

Quality7.7
Valuation3.6
Growth5.6
Financial strength2.9
Momentum8.3

Rank vs. Software - Infrastructure (50 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.

Metrics compared with the industry

On profitability and quality, Microsoft ranks above average in the group Software - Infrastructure (7.7/10). On growth, the company ranks in the middle in the group Software - Infrastructure (5.6/10). On valuation (higher = cheaper), the stock ranks below average in the group Software - Infrastructure (3.6/10). On financial strength, Microsoft ranks below average in the group Software - Infrastructure (2.9/10).

MetricStockGroup medianRanking
Forward P/E22.0x16.0xbetter than 37 %
Trailing P/E27.8x31.5xbetter than 54 %
PEG ratio1.6x1.4xbetter than 44 %
EV/EBITDA20.0x20.0xbetter than 50 %
Price/sales11.4x3.8xbetter than 13 %
Price/book8.4x5.8xbetter than 36 %
Revenue growth18.8%14.3%better than 59 %
Earnings growth32.3%24.4%better than 53 %
Gross margin67.7%72.3%better than 41 %
Operating margin49.8%13.3%better than 97 %
Net margin41.2%10.5%better than 93 %
Return on equity34.2%12.4%better than 79 %
Debt/equity28.5%17.5%better than 45 %
Current ratio1.2x1.5xbetter than 34 %
Free cash flow yield0.1%3.7%better than 7 %
Dividend yield0.7%1.1%–
Payout ratio19.0%31.4%–
Beta1.041.04–

Valuation: what is Microsoft worth?

Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give Microsoft a model range of 386.99 USD to 533.24 USD per share.

Price 533.24 USD
Analysts 636.12 USD
Fair value range 386.99 USD – 533.24 USDMidpoint 460.11 USD (−13.7% vs. price)

54 analysts, average rating “Strong buy”, average price target 636.12 USD (+19.3%).

The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.

What the business depends on

  • Demand for cloud infrastructure and platform services such as Azure largely determines the company's growth.
  • Recurring subscriptions for Microsoft 365 and related services secure predictable revenue and high customer retention.
  • The integration of AI features into existing products may increase pricing levels and usage per customer.

Risks

  • Expanding data centers and AI infrastructure requires high investment, which may weigh on margins and return on capital.
  • Antitrust and regulatory proceedings as well as data protection requirements may restrict bundling strategies and business practices.
  • Strong competition in cloud and AI as well as dependence on partners such as OpenAI create strategic uncertainty.

What to look for with Microsoft

Revenue growth and the operating margin of the cloud segment are particularly informative, because they show whether high infrastructure investments are being converted into revenue profitably.

Full AI analysis of Microsoft

The AI evaluates all the numbers above and turns them into an assessment with a score, strengths and weaknesses, a fair value range and risks – from €2, and in the Pro version (€10) with moat, peer comparison, DCF and scenarios. See an example.

Analyze a stock

Results in minutes
1 Choose a stock
2 Choose the depth

See what you get first: Example Compact (Apple) PDF Example Pro (NVIDIA) PDF

3 Delivery
Secure payment via Stripe Report by email + PDF No subscription

Frequently asked questions about Microsoft stock

What is the P/E ratio of Microsoft stock?

Based on expected earnings, Microsoft trades at a P/E of 22.0x, compared with a median of 16.0x for the peer group Software - Infrastructure. Based on the earnings of the last twelve months it is 27.8x. (data as of Nov 10, 2026)

Does Microsoft pay a dividend?

Yes. The dividend yield is currently 0.7%, with a payout ratio of 19.0% of earnings.

Is Microsoft stock undervalued?

Measured by valuation metrics (P/E, EV/EBITDA, price/sales, PEG), Microsoft is currently valued roughly in line with the average of the companies in the group Software - Infrastructure (valuation score 3.6 out of 10). Our model calculations (DCF and industry multiples) give a range of 386.99 USD to 533.24 USD per share at a price of 533.24 USD. This is a model calculation, not an investment recommendation.

What do analysts say about Microsoft stock?

54 analysts have an average price target of 636.12 USD (+19.3% vs. the current price); the average rating is “Strong buy”. Analyst targets are opinions and change frequently.

Comparable stocks

All information without guarantee. Metrics from public market data, updated daily; company profile written editorially with the help of AI. Not investment advice and not a solicitation to buy or sell securities.