US · Nasdaq · MSFT
Microsoft (MSFT) stock analysis: valuation and financials
Technology · Computer Software: Prepackaged Software
$538.18 +0.6% Price as of Oct 12, 2026
Elite franchise: +17.8% revenue growth, 46.8% operating margin, $36.55B net cash, but capex at 34.9% of revenue and 29.9x P/E price the bull case.
- Market cap
- $4.0T
- P/E
- 29.9x
- EV/Sales
- 11.9x
- FCF yield
- 1.7%
- Dividend yield
- 0.7%
- 52-week range
- $352.83 – $542.07
- Next earnings
- Oct 28, 2026
Research as of Oct 12, 2026
Business quality scorecard
- Growth77
- Profitability96
- Cash flow87
- Balance sheet79
- Capital allocation58
- Innovation46
- Valuation45
0–100, computed from reported financials; higher is better, and a higher valuation score means cheaper.
How it makes money
Enterprises, developers, governments and consumers pay through consumption-based cloud contracts, per-seat subscriptions, software licensing, advertising and device sales; Productivity and Business Processes (59.9% operating margin, 54.0% of segment profit) and Intelligent Cloud (36.7% of profit) are the profit engines, together 90.7% of profit.
Financials by year
| FY2022Jul 2021–Jun 2022 | FY2023Jul 2022–Jun 2023 | FY2024Jul 2023–Jun 2024 | FY2025Jul 2024–Jun 2025 | FY2026Jul 2025–Jun 2026 | |
|---|---|---|---|---|---|
| Revenue | $198.3B | $211.9B | $245.1B | $281.7B | $331.8B |
| Revenue growth | +18.0% | +6.9% | +15.7% | +14.9% | +17.8% |
| Gross margin | 68.4% | 68.9% | 69.8% | 68.8% | 67.9% |
| Operating margin | 42.1% | 41.8% | 44.6% | 45.6% | 46.8% |
| Net income | $72.7B | $72.4B | $88.1B | $101.8B | $133.7B |
| Free cash flow | $65.1B | $59.5B | $74.1B | $71.6B | $67.0B |
| FCF margin | 32.9% | 28.1% | 30.2% | 25.4% | 20.2% |
Amounts in USD · What is free cash flow?
Margins Gross margin fell to 67.94% in FY2026 from 68.82% in FY2025 (-0.88pp), and slid each quarter from 69.05% in Q1 FY2026 to 67.2% in Q4. Operating margin rose to 46.78% from 45.62% as opex grew only 7% against 18% revenue growth, but also eased to 45.11% in Q4.
- Cash flow HealthyOperating cash flow $182.9B versus net income $133.7B, cash conversion 1.35x; MD&A attributes the $46.8B increase to higher customer cash receipts and lower tax payments, partly offset by supplier payments.
- Debt LowNet cash of $36.55B: total debt $40.29B against $20.94B cash plus $55.91B short-term investments; net debt/EBITDA is -0.19x and debt-to-equity 0.09x.
Balance sheet Leverage · Net cash
- Cash & short-term investments
- $76.8B
- Total debt
- $40.3B
- Net cash
- $36.5B
- Interest coverage
- 50.9x
- Current ratio
- 1.2x
As of Jun 30, 2026 · Amounts in USD · How to read a balance sheet
Management and track record
- Management StrongFY2026 revenue rose 17.8% to $331.8B with operating margin 46.8%, net margin 40.3% and EPS up 31.6%; Nadella (CEO since 2014) and Hood (CFO since 2013) give long, stable leadership.
- Credibility HighReleases publish no numeric guidance, only claiming beats on the call; reported delivery matched: revenue grew 18.4%, 16.7%, 18.3% and 17.8% across Q1–Q4 FY2026, with FY2026 revenue $331.8B.
Valuation range
Implied value per share · Price when researched: $538.18
Each scenario assumes five years of revenue growth, an FCF margin and an exit multiple, discounted to today. The assumptions and sensitivities are in the full report.
The full report also covers
- Revenue, growth and outlook of each segment
- Moat and main competitors
- Key risks
- Capital allocation: where the free cash flow went
- What management promised, and what they delivered
- Scenario assumptions and sensitivities
- A source for every claim
- Ask AI about this company
The full report is for members.