Microsoft Corporation

NasdaqGS:MSFT Stock Report

Market Cap: US$3.0t

Microsoft Valuation

Is MSFT undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

  • Below Fair Value

  • Significantly Below Fair Value

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Analyst Forecast

Share Price vs Fair Value

What is the Fair Price of MSFT when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Discounted Cash Flow
Simply Wall St
US$472.55
Fair Value
13.6% undervalued intrinsic discount
50
Number of Analysts

Below Fair Value: MSFT ($408.21) is trading below our estimate of fair value ($472.55)

Significantly Below Fair Value: MSFT is trading below fair value, but not by a significant amount.

Key Valuation Metric

Which metric is best to use when looking at relative valuation for MSFT?

Key metric: As MSFT is profitable we use its Price-To-Earnings Ratio for relative valuation analysis.

The above table shows the Price to Earnings ratio for MSFT. This is calculated by dividing MSFT's market cap by their current earnings.
What is MSFT's PE Ratio?
PE Ratio32.7x
EarningsUS$92.75b
Market CapUS$3.03t

Price to Earnings Ratio vs Peers

How does MSFT's PE Ratio compare to its peers?

The above table shows the PE ratio for MSFT vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyForward PEEstimated GrowthMarket Cap
Peer Average32.1x
GOOGL Alphabet
21.9x11.0%US$2.2t
META Meta Platforms
27.8x10.3%US$1.7t
ORCL Oracle
40.4x15.7%US$469.4b
AAPL Apple
38.4x10.3%US$3.7t
MSFT Microsoft
32.7x12.5%US$3.0t

Price-To-Earnings vs Peers: MSFT is expensive based on its Price-To-Earnings Ratio (32.7x) compared to the peer average (32.1x).

Price to Earnings Ratio vs Industry

How does MSFT's PE Ratio compare vs other companies in the US Software Industry?

8 CompaniesPrice / EarningsEstimated GrowthMarket Cap
YXT YXT.COM Group Holding
1.8xn/aUS$117.15m
NISN Nisun International Enterprise Development Group
2.1xn/aUS$35.02m
NXTT Next Technology Holding
0.4xn/aUS$9.14m
ULY Urgent.ly
0.07x-13.0%US$6.08m
MSFT 32.7xIndustry Avg. 38.2xNo. of Companies12PE020406080100+
8 CompaniesEstimated GrowthMarket Cap
No more companies

Price-To-Earnings vs Industry: MSFT is good value based on its Price-To-Earnings Ratio (32.7x) compared to the US Software industry average (38.2x).

Price to Earnings Ratio vs Fair Ratio

What is MSFT's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

MSFT PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio32.7x
Fair PE Ratio68.8x

Price-To-Earnings vs Fair Ratio: MSFT is good value based on its Price-To-Earnings Ratio (32.7x) compared to the estimated Fair Price-To-Earnings Ratio (68.8x).

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

The above table shows the analyst MSFT forecast and predictions for the stock price in 12 month’s time.
DateShare PriceAverage 1Y Price TargetDispersionHighLow1Y Actual priceAnalysts
CurrentUS$408.21
US$508.05
+24.5%
8.3%US$650.00US$420.00n/a50
Feb ’26US$415.06
US$507.71
+22.3%
8.3%US$650.00US$420.00n/a50
Jan ’26US$421.50
US$506.56
+20.2%
8.3%US$650.00US$420.00n/a50
Dec ’25US$423.46
US$503.06
+18.8%
7.6%US$600.00US$420.00n/a50
Nov ’25US$410.37
US$502.44
+22.4%
7.7%US$600.00US$420.00n/a50
Oct ’25US$420.69
US$501.75
+19.3%
6.3%US$600.00US$440.00n/a50
Sep ’25US$417.14
US$501.45
+20.2%
6.6%US$600.00US$440.00n/a51
Aug ’25US$417.11
US$499.34
+19.7%
6.8%US$600.00US$429.70n/a52
Jul ’25US$456.73
US$490.79
+7.5%
7.8%US$600.00US$429.70n/a51
Jun ’25US$415.13
US$483.08
+16.4%
7.5%US$600.00US$399.70n/a52
May ’25US$394.94
US$477.62
+20.9%
7.2%US$600.00US$399.70n/a52
Apr ’25US$424.57
US$470.12
+10.7%
7.4%US$600.00US$399.70n/a53
Mar ’25US$415.50
US$465.63
+12.1%
7.4%US$600.00US$399.70n/a51
Feb ’25US$403.78
US$456.93
+13.2%
8.4%US$600.00US$370.00US$415.0649
Jan ’25US$376.04
US$415.87
+10.6%
9.7%US$600.00US$298.10US$421.5051
Dec ’24US$374.51
US$406.73
+8.6%
6.9%US$475.00US$298.10US$423.4650
Nov ’24US$346.07
US$403.27
+16.5%
6.6%US$450.00US$298.10US$410.3750
Oct ’24US$315.75
US$393.69
+24.7%
7.4%US$440.00US$298.10US$420.6949
Sep ’24US$328.66
US$389.52
+18.5%
10.0%US$440.00US$232.00US$417.1449
Aug ’24US$336.34
US$390.21
+16.0%
9.7%US$450.00US$232.00US$417.1150
Jul ’24US$340.54
US$347.32
+2.0%
10.9%US$450.00US$232.00US$456.7346
Jun ’24US$332.58
US$341.67
+2.7%
10.7%US$450.00US$232.00US$415.1347
May ’24US$305.56
US$331.47
+8.5%
9.3%US$420.00US$232.00US$394.9448
Apr ’24US$288.30
US$298.07
+3.4%
12.2%US$420.00US$212.00US$424.5747
Mar ’24US$246.27
US$292.33
+18.7%
11.2%US$411.00US$212.00US$415.5047
Feb ’24US$252.75
US$286.12
+13.2%
11.5%US$411.00US$212.00US$403.7847
Analyst Price Target
Consensus Narrative from 50 Analysts
US$508.05
Fair Value
19.7% undervalued intrinsic discount
50
Number of Analysts

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.

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Company Analysis and Financial Data Status

DataLast Updated (UTC time)
Company Analysis2025/02/22 03:45
End of Day Share Price 2025/02/21 00:00
Earnings2024/12/31
Annual Earnings2024/06/30

Data Sources

The data used in our company analysis is from S&P Global Market Intelligence LLC. The following data is used in our analysis model to generate this report. Data is normalised which can introduce a delay from the source being available.

PackageDataTimeframeExample US Source *
Company Financials10 years
  • Income statement
  • Cash flow statement
  • Balance sheet
Analyst Consensus Estimates+3 years
  • Forecast financials
  • Analyst price targets
Market Prices30 years
  • Stock prices
  • Dividends, Splits and Actions
Ownership10 years
  • Top shareholders
  • Insider trading
Management10 years
  • Leadership team
  • Board of directors
Key Developments10 years
  • Company announcements

* Example for US securities, for non-US equivalent regulatory forms and sources are used.

Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more.

Analysis Model and Snowflake

Details of the analysis model used to generate this report is available on our Github page, we also have guides on how to use our reports and tutorials on Youtube.

Learn about the world class team who designed and built the Simply Wall St analysis model.

Industry and Sector Metrics

Our industry and section metrics are calculated every 6 hours by Simply Wall St, details of our process are available on Github.

Analyst Sources

Microsoft Corporation is covered by 99 analysts. 54 of those analysts submitted the estimates of revenue or earnings used as inputs to our report. Analysts submissions are updated throughout the day.

AnalystInstitution
Harshit GuptaAccountability Research Corporation
Kadambari DaptardarAccountability Research Corporation
Adam ShepherdArete Research Services LLP