Assessing Microsoft (MSFT) Valuation After Recent Pullback And Fading Share Price Momentum

Microsoft’s recent performance in focus

With no single headline event driving Microsoft (MSFT) today, the stock’s recent pullback and current fundamentals are front and center for investors trying to understand how the business and valuation now line up.

See our latest analysis for Microsoft.

Microsoft’s share price has retreated to US$384.47, with a 1 month share price return of 17.49% and a 3 month share price return of 20.81%, even though the 3 year total shareholder return sits at 57.80%. This suggests recent momentum has faded while longer term holders have still seen meaningful gains.

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With Microsoft trading at US$384.47, a value score of 5 and an implied 16% discount to one intrinsic estimate, investors now face a key question: is there genuine upside left here or is future growth already priced in?

Most Popular Narrative: 9.1% Undervalued

According to the most followed narrative, Microsoft’s fair value sits at $423.14, which is above the last close of $384.47, and that gap is grounded in specific growth and profitability assumptions.

AI Growth with Copilot & Azure AI: Microsoft is aggressively integrating AI into Office 365 (Copilot) and Azure AI, driving enterprise adoption and monetizing AI-powered software.

• Cloud Expansion (Azure): Azure continues to gain market share, benefiting from enterprise digital transformation and AI workloads.

Read the complete narrative.

Want to see what kind of revenue mix and margin profile sits behind that fair value, and how future profit multiples tie it all together? The narrative connects AI, cloud and gaming into one valuation story, with specific long run assumptions that are very different from just extrapolating recent results.

Result: Fair Value of $423.14 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this hinges on strong AI and Azure execution, while tougher regulation or slower Copilot adoption could quickly challenge that 9.1% undervalued narrative.

Find out about the key risks to this Microsoft narrative.

Next Steps

If this mix of upside and risk feels finely balanced, do not wait for consensus. Instead, review the underlying data and weigh 5 key rewards and 1 important warning sign for yourself.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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