Microsoft Corp (MSFT) stock analysis
Microsoft Corp (MSFT) clears 2 of this site's 8 mechanical value filters, 6 of 8 Buffett-style checks and 3 of 5 Lynch-style checks. At $521.08 it trades 243.8% above this site's neutral DCF value (a margin of safety of -243.8%). Its earnings quality rates Strong and it returns +0.9% to shareholders net of dilution. Figures are as of October 23, 2026, from SEC filings and market data refreshed weekly; this is educational analysis, not investment advice.
Data as of October 23, 2026. Refreshed weekly from SEC filings and market data.
What does Microsoft do?
Microsoft sells software, cloud computing and devices. Its Azure cloud platform and Microsoft 365 business subscriptions are the main profit engines, alongside Windows, LinkedIn, GitHub and the Xbox gaming business.
Brands and businesses it owns
- Windows
- Microsoft 365
- Azure
- Teams
- GitHub
- Xbox
- Activision Blizzard
- Minecraft
- Copilot
What stands out about Microsoft?
- The share price implies more than 40% yearly growth. At $521.08, free cash flow per share would have to grow faster than 40% a year, fading to 2.5% by year 10, for this site's DCF to match the price. Change the assumptions.
- Misses 4 of the 8 value filters. It fails Trailing P/E < 25 (29.41), PEG Ratio < 1.5 (1.67) and Price/Book < 8 (8.89) and 1 more; the other 2 pass and 2 were not evaluated. See every filter.
- Strongest against peers: net margin. At 40.3% (peer median 16.9%) it ranks 7th of 44 among technology stocks this site tracks. See the ranking.
- Weakest against peers: free-cash-flow yield. At 1.7% (peer median 3.8%) it ranks 37th of 44 among technology stocks this site tracks. See the ranking.
- Held by investors this site follows. Bill Ackman (11.9% of its portfolio), Terry Smith (4.4% of its portfolio) and George Soros (1.2% of its portfolio), from their latest 13F filings. See Superinvestors.
How has Microsoft's share price moved?
The interactive price chart needs JavaScript.
Is Microsoft undervalued? The value diligence check
Every value-investing signal this site computes for this stock, gathered in one place: the same real numbers from the tools below, not a new score.
- Margin of safety (DCF) -243.8%
- P/E vs. its own history 29.4x · the middle Real range: 20.8x–37.9x over 5 years (net income per diluted share from each fiscal year's 10-K, paired with the real closing price at that fiscal year-end).
- Wall St. analyst rating Buy · 4.29/5 65 analysts this month: 22 strong buy, 40 buy, 3 hold, 0 sell, 0 strong sell (Finnhub). Up from 4.26 last month.
- Earnings quality (is the profit real?) Strong · all 5 checks clean Beneish M-score −2.65 · accruals −7.1% of assets · 135% of profit arrived as cash · stock comp 3.7% of revenue · share count −0.1% a year. From the latest 10-K (year to Jun 2026) - see the Earnings Quality Screener for how each check is scored.
- Shareholder yield (cash back to owners) +0.9% net Latest fiscal year (2026): dividends 0.7% + buybacks 0.6% − stock comp 0.3%, as a share of today's market cap. Over 14 years its split-adjusted share count fell 12%. See Shareholder Yield Leaders.
- Capital needed to grow (See's test) $2.82 per $1 of new profit · FlightSafety-like Operating profit $36B → $131B, capital needed $57B → $326B, 2017–2026 (3-year averages); return on capital now 40% before tax. Buffett's See's Candies needed $0.42 per $1 of new profit, FlightSafety $3.20, a typical grower about $5. See Capital-Light Compounders.
- PEG (growth at a reasonable price) 1.67 · Above fair P/E 29.4× ÷ 17.6% a year of growth behind it. 189th lowest of 447 stocks with a usable PEG. Lynch's fair value is a PEG of 1; a very high PEG usually means almost no growth, a very low one a profit spike. See PEG Ratio Ranking.
- Compounder lenses (4) 2 of 4 · misses cash back, price Capital-light growth: cleared; Profit is real: cleared; Cash to owners: not cleared (+0.8% a year net); Fair price (PEG): not cleared (PEG 1.67, over 1.5). See Compounders at a Fair Price, which also lets you move the PEG bar.
- Value trap check Clear
- Munger's Inversion Check 2 flags
- Standing vs. sector peers 3 of 7 measures above the median Compared with the 43 other technology stocks this site tracks: 2 in the top third, 2 in the bottom third.
- Dividend payout sustainability 0/6 · clean
How does Microsoft compare with its peers?
3 of 7 measures sit above the median of the 43 other technology stocks tracked here, 2 in the top third and 2 in the bottom third.
- P/E ratiolower is cheaper · peer median 26.0× 29.4× –21st of 39
- Free-cash-flow yieldhigher is cheaper · peer median 3.8% 1.7% ✕37th of 44
- Return on equityhigher is better · peer median 24% 33% –18th of 44
- Net marginhigher is better · peer median 16.9% 40.3% ✓7th of 44
- Revenue growthhigher is better, year on year · peer median 19.1% 17.8% –26th of 44
- Debt / equitylower is safer · peer median 0.60 0.24 ✓10th of 44
- Dividend yieldamong dividend payers · peer median 1.04% 0.67% ✕13th of 17
Peers are the stocks this site tracks in the same sector group, not every listed competitor. The bar runs from the weakest peer (left) to the strongest (right); the tick is the middle. Measures that don't apply to a sector (cash-flow yield for banks, debt for financials) are left out.
What would Buffett & Lynch say?
Buffett's checklist is built around durable, profitable businesses bought at sensible prices, and MSFT doesn't clear enough of it yet. In its favor: MSFT is currently earning a strong return on shareholders' equity, and has kept that profitability up over five years, not just this year, carries a conservative amount of debt relative to equity, converts sales into profit at healthy margins, has grown earnings per share at a solid clip over five years, and earns many times its interest expense, so debt service isn't a worry. Where it comes up short: MSFT is trading above what a conservative discounted-cash-flow estimate says it's worth right now, and trades rich relative to owner earnings, the real cash the business could pay out.
- ROE (TTM) > 11% ✓
- ROE (5yr avg) > 11% ✓
- Debt/Equity < 0.5 ✓
- Pretax margin > 15% ✓
- EPS growth (5yr) > 7% ✓
- Interest coverage > 5x ✓
- Trading below intrinsic value (DCF) ✕
- Price vs. owner earnings < 25x ✕
- Bonus: returning capital via buybacks FY2026
Lynch looked for growth stories that weren't overpriced for that growth, and MSFT falls short of his bar. In its favor: MSFT is growing earnings 20-50% a year, his classic fast-grower zone, isn't leaning on debt to fund that growth, and isn't asking too much even by a fast grower's usual richer multiple. Where it comes up short: MSFT doesn't clear the tighter PEG bar a fast grower needs to justify its pace, and isn't generating enough free cash flow to justify a fast grower's richer price.
- PEG < 1 (stricter for fast growers) ✕
- EPS growth 20%-50% ✓
- Debt/Equity < 0.5 ✓
- P/E < 40 ✓
- Price/FCF < 40 ✕
Quantitative approximations of each investor's documented approach, not endorsed by either investor or their estates - commentary, not this site's actual ranking criteria. Buffett never published a numeric checklist: only 2 of his 8 checks here trace to his own documented concepts ("owner earnings," from his 1986 shareholder letter, and "price is what you pay, value is what you get," his case against fixed P/E/P/B ceilings) - the other 6 (ROE, debt, margins, growth, interest coverage) use commonly-cited thresholds that are not numbers he himself published. The 8 hard filters below (plus the Munger check and Graham margin of safety) are this site's real, mechanical screen and are computed completely independently of the checklists above.
Berkshire Hathaway's own filing
Which of the 8 value filters does Microsoft pass?
- Market Cap > $25B $3.93T
- Trailing P/E < 25 29.41
- PEG Ratio < 1.5 1.67
- Price/Book < 8 8.89
- Price/Sales < 7 11.85
- EPS Growth YoY > -5% +31.7%
- vs 50-day MA (±12%) Not evaluated †
- vs 200-day MA (±12%) Not evaluated †
What is Microsoft's margin of safety?
-245% on 2026-10-07 → -244% on 2026-10-23 (5 weekly readings).
Where is Microsoft in its 52-week range?
What is the short interest in Microsoft?
61,133,927 shares short as of 2026-09-30 (FINRA settlement date). Reported twice a month, so this only changes roughly every two weeks, not daily.
What could go wrong with Microsoft? Munger's inversion check
"Invert, always invert." Instead of reasons to buy, these are reasons to hesitate, not a verdict, and not everything worth knowing about a business.
- Margin of safety, even in the bull case -103%
- Short interest under 5% of float 0.8%
- Passes most of the 6 fundamental filters 2/6 passed
- Price run-up backed by value, not just momentum +48% off 52wk low
- Debt/equity stable since 2017 0.88 → 0.09
Doesn't cover circle of competence, management quality, or accounting concerns: those need judgment, not data.
How much have Microsoft shareholders gained per year?
Earnings growth per share plus dividend.
An earnings-based proxy, not a stock-price total return - it doesn't capture multiple expansion/contraction or reinvested dividends. EPS from MSFT's own 10-K filings; dividend yield is the current trailing yield on today's price, from the same weekly fetch as the rest of this site.
What do Microsoft's 10-year financials show?
From MSFT's own 10-K filings (SEC EDGAR): up to the last 10 fiscal years. Press any year's bars for the exact figures.
A single trade isn't automatically bullish or bearish. Insiders sell for all kinds of personal reasons. Most recent filings for MSFT:
Frequently asked questions about Microsoft
What kind of company is Microsoft?
Microsoft sells software, cloud computing and devices. Its Azure cloud platform and Microsoft 365 business subscriptions are the main profit engines, alongside Windows, LinkedIn, GitHub and the Xbox gaming business. Brands and businesses it owns include Windows, Microsoft 365, Azure, Teams, LinkedIn and GitHub. This site groups it with Technology stocks.
Is Microsoft trading above or below its DCF value?
At $521.08, MSFT trades 243.8% above this site's neutral DCF value of $151.56 per share, a margin of safety of −243.8%. That DCF projects free cash flow for 10 years, with growth starting at 8% and fading to 2.5%, discounted at 10%; it is one set of assumptions, not a forecast. Test your own in the Intrinsic Value Calculator.
How many of this site's 8 value filters does Microsoft pass?
MSFT passes 2 of 8. It passes Market Cap > $25B ($3.93T) and EPS Growth YoY > -5% (+31.7%). It misses Trailing P/E < 25 (29.41), PEG Ratio < 1.5 (1.67), Price/Book < 8 (8.89) and Price/Sales < 7 (11.85). vs 50-day MA (±12%) and vs 200-day MA (±12%) were not evaluated, because the moving-average checks only run on stocks that clear the fundamentals first. The 8-filter list shows every stock that passes all of them.
What growth is Microsoft's share price pricing in?
At $521.08, free cash flow per share would have to grow faster than 40% a year, fading to 2.5% by year 10, for this site's DCF to match the price. Change the assumptions.
Which well-known investors own Microsoft?
Among the investors whose SEC 13F filings this site tracks, Bill Ackman (11.9% of the portfolio; added to the position), Terry Smith (4.4% of the portfolio; trimmed the position), George Soros (1.2% of the portfolio; trimmed the position) and Ray Dalio (1.1% of the portfolio; trimmed the position) held MSFT as of June 30, 2026. 13F filings cover only US-listed equities and arrive up to 45 days after the quarter ends, so they lag the real portfolios. See Superinvestors.
When does Microsoft report earnings next?
Microsoft's next earnings report is expected on October 28, 2026 after the market closes, with analysts expecting earnings of $4.82 per share. Dates come from the Finnhub earnings calendar and can move. In its last 4 quarters it beat the estimate 4 times, by an average of +6.3%.
Where do these numbers come from?
- Financial statements: Microsoft's 10-K annual report for the year ended Jun 30, 2026, filed Jul 29, 2026 (filing index). Every earlier year in the 10-year financials comes from the company's older 10-K filings, all listed on SEC EDGAR.
- Prices and market data: quotes, P/E and analyst ratings from Finnhub; daily price history and the 52-week range from Twelve Data, both refreshed weekly. Short interest comes from FINRA, reported twice a month.
- How to check a figure: click any number in the card above to see its exact source, and read the Editorial Standards for every rule behind the checks.
About this Microsoft Corp analysis
This page shows every value-investing check the site runs on Microsoft Corp (MSFT) in one place: the 8 mechanical filters, the Buffett and Lynch checklists, a margin of safety from a disclosed DCF, earnings quality, shareholder yield and how it ranks against its sector peers. The numbers come from SEC filings and public market data, refreshed weekly, and the same rules apply to every stock on the stock list. See Editorial Standards for the sources and the rules, or run your own filters in the stock screener.