MSFT
MICROSOFT CORPNasdaqValuation snapshot
Above bull casePrice is above even the bull case.
Price as of Sep 4, 2026 · Valuation Aug 9, 2026
What drives MSFT's base case?
base-case thesisMicrosoft finished fiscal 2026 with $331.8 billion in revenue, up 18%, and profits growing even faster at 21%. Management has guided the next quarter to 16–17% growth, and the company is sitting on $678 billion of already-signed customer contracts, so the next couple of years have real visibility. This case assumes growth then eases gradually toward high single digits as the business gets bigger, rather than dropping off a cliff. Profitability holds near last year's level because the heavy cost of new data centers is roughly balanced by the efficiency of running them at scale and by stretching how long those buildings are written off.
What shapes the assumptions
Guided near-term revenue
Q1 FY2027 revenue guidance of $89.85B–$90.95B, or 16–17% growth
Raises revenue growth
Contracted backlog conversion
$678B commercial RPO, ~30% recognizable within 12 months
Raises revenue growth
Operating leverage versus depreciation drag
FY2026 operating income +21% on revenue +18%, margin 46.8%
Informs operating margin
Data-center buildout funded from earnings
~$175B FY2027 capex and finance leases against ~$125B NOPAT
Raises reinvestment
Stable realized tax profile
FY2026 effective tax rate of about 19.4%
Informs tax rate
Each driver links a business metric to the forecast assumption it shapes — the basis for this case, not investment advice.
Why the gap?
The market is pricing this as if revenue grows 41.6% a year. Over the last 5 years it grew 14.8% a year — so the price assumes far more than it has delivered.
What else could explain it?›
- How confident is this estimate?
- Robustness 67.0/10 (Moderate) — some of any gap is our own uncertainty rather than disagreement.
- What would change the answer?
- Which assumption this valuation swings on, and by how much.
Many combinations of assumptions reproduce the same price. These are ways to read what the market might be expecting, not the market's actual view. How this is worked out
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
View details
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
Three independently researched cases generated automatically from published financials. Every assumption is justified and cited; the discount rate is computed from researched market inputs.
Base inputs from financials
source period →Base revenue (TTM)
$318.3B
Diluted shares
7,445,000,000
Net cash
-$8.2B
Bear
medium confidence$79.83
IV / share
-84.4% vs $510.12
- Explicit cash flows
- $22.29
- Terminal value
- $58.64
- Net cash
- -$1.10
- Intrinsic value / share
- $79.83
73.4% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth13.0% → 10.0% → 7.5% → 5.5% → 4.0%medium
How derived: Starting from FY2026 actual revenue of $331.8B (+18%) and Q1 FY2027 guidance of $89.85–90.95B (+16–17%), this case assumes the AI build-out cycle peaks early: Microsoft disclosed ~45% of commercial RPO is tied to a single counterparty (OpenAI) and that RPO ex-OpenAI grew only 25%, so if frontier-model spending digests, growth decays toward the 5–7% organic rate Microsoft posted in FY2016–FY2017 and toward the More Personal Computing trend (-4.4% in Q4 FY2026 with Windows OEM -7%).
Why this confidence: Near-term revenue guidance issued by management for Q1 FY2027 ↑, Contracted backlog of $678B provides a floor on years 1–2 ↑, Five-year horizon far exceeds the 2.3-year weighted-average RPO duration ↓, Deceleration path is a judgment about AI capex digestion, not a disclosed figure ↓
No tracked driver measures this assumption yet.
Evidence for
- More Personal Computing revenue fell 4.4% to $12.85B in Q4 FY2026, with Windows OEM licensing down 7% — roughly a seventh of revenue is already shrinking.[MSFT FY26 Q4 press release]· primary
- Commercial RPO grew 84% to $678B headline but only 25% excluding OpenAI, indicating the backlog surge is concentrated in one counterparty rather than broad-based demand.[MSFT Q4 FY2026 earnings call transcript]· primary
- Microsoft's own history shows growth can stall hard at scale: revenue fell 2.6% in FY2016 and grew only 5.4–5.9% in FY2012, FY2013 and FY2017.[MSFT reported annual revenue history]· primary
Evidence against
- Azure grew 43% in Q4 FY2026 and crossed a $100B annualized run rate, with management stating demand still exceeds available supply — the opposite of a demand-driven slowdown.[MSFT FY26 Q4 press release]· primary
- Management guided fiscal Q1 2027 revenue of $89.85B–$90.95B, or 16–17% growth, well above this case's 13% first-year assumption.[MSFT Q4 FY2026 earnings call transcript]· primary
Operating margin41.0%medium
How derived: Operating margin declined sequentially through FY2026 from 48.9% in Q1 to 46.3% in Q3 and roughly 45.1% in Q4 ($40.6B on $90.0B) even as revenue accelerated, so this case extrapolates that compression as depreciation from ~$175B of FY2027 capex and finance leases flows through the P&L, landing near the ~41% average Microsoft ran in FY2019–FY2020 before the current cloud margin peak.
Why this confidence: Four consecutive quarters of disclosed sequential margin decline ↑, Management disclosed the FY2027 capex figure driving depreciation ↑, Useful-life change makes the depreciation trajectory harder to model ↓, Terminal margin is an extrapolation, not company-guided ↓
No tracked driver measures this assumption yet.
Evidence for
- Reported quarterly operating margin fell in each quarter of FY2026 — 48.9%, 47.1%, 46.3%, then about 45.1% in Q4 — despite accelerating revenue.[MSFT FY2026 quarterly results]· primary
- Management guided FY2027 capital expenditures and finance leases of roughly $175B, a depreciation base that must be expensed against future revenue.[MSFT Q4 FY2026 earnings call]· primary
- Microsoft cited roughly $25B of higher component pricing within its calendar-2026 capex plan, signalling input-cost inflation in the AI hardware stack.[MSFT Q3 FY2026 capex commentary]· secondary
Evidence against
- For full-year FY2026 operating income grew 21% versus revenue growth of 18%, so margin expanded rather than contracted over the year as a whole.[MSFT FY26 Q4 press release]· primary
- Effective FY2027 Microsoft extends the useful life of data centers and office buildings from 15 to 25 years, which slows the rate at which capex becomes depreciation expense.[MSFT Q4 FY2026 earnings call transcript]· primary
Tax rate21.0%high
How derived: FY2026 income tax provision of $32.185B against net income of $133.749B implies an effective rate near 19.4%, and this case nudges it to the 21% US statutory rate on the view that Pillar Two minimum taxes and reduced foreign-derived intangible income benefits erode the sub-statutory rate Microsoft has enjoyed.
Why this confidence: Effective rate computed directly from reported 10-K provision and net income ↑, Microsoft's effective rate has been stable in a narrow 18–20% band for years ↑, Future international tax-regime changes are a policy judgment ↓
No tracked driver measures this assumption yet.
Evidence for
- Microsoft's FY2026 total income tax provision was $32.185B, up 47.7% year over year, outpacing pre-tax income growth.[MSFT income taxes 2012-2026]· secondary
- The US federal statutory corporate rate is 21%, a natural ceiling-anchor for a company whose reported effective rate benefits from expiring international and credit provisions.[MSFT FY2026 Form 10-K tax footnote]· primary
Evidence against
- Microsoft's reported effective tax rate was 19.22% for the quarter ended March 2026, below the 21% assumed here.[MSFT quarterly tax rate]· secondary
- Accelerated depreciation on AI infrastructure drove Microsoft's federal cash tax rate down to about 2.44%, a structural shield that persists while capex is elevated.[ITEP analysis of Microsoft FY2026 taxes]· secondary
Reinvestment rate68.0%medium
How derived: Measured as net reinvestment (capex plus acquisitions, less depreciation, plus working-capital change) as a share of after-tax operating profit, FY2026 NOPAT of roughly $125B ($155.2B operating income taxed at ~19.4%) against guided FY2027 capex and finance leases of about $175B implies Microsoft is currently reinvesting more than it earns; this case assumes capital intensity stays punishingly high while revenue growth fades, so each dollar of growth costs more.
Why this confidence: Explicit FY2027 capex figure disclosed by the CFO ↑, Lease reclassification and useful-life change blur gross capex versus true economic reinvestment ↓, No company guidance exists for years 3–5 of capital intensity ↓
No tracked driver measures this assumption yet.
Evidence for
- Amy Hood guided FY2027 capital expenditures and finance leases of roughly $175B and said she sees further growth in capex, against FY2026 operating income of $155.2B.[MSFT Q4 FY2026 earnings call transcript]· primary
- Quarterly capex reached $37.5B in Q2 FY2026, up 66% year over year, and Microsoft said it still could not build data centers fast enough.[Microsoft AI capex analysis]· secondary
Evidence against
- Management stated Microsoft should remain cash-flow positive in fiscal 2027 despite the capex ramp, implying reinvestment does not fully consume operating earnings.[MSFT Q4 FY2026 earnings call transcript]· primary
- Microsoft returned $10.2B to shareholders via dividends and buybacks in Q4 FY2026, indicating surplus capital beyond reinvestment needs.[MSFT FY26 Q4 press release]· primary
Terminal growth2.0%medium
How derived: Terminal growth must sit below the 4.66% risk-free rate for a mature firm, and this case sets it at roughly long-run US inflation on the view that a post-AI-cycle Microsoft, with a structurally declining Windows/devices business, grows no faster than the economy's price level.
Why this confidence: Bounded above by an observable, citable risk-free rate ↑, Supported by the observed decline in the More Personal Computing segment ↑, Perpetual growth is inherently unobservable and unguided ↓
No tracked driver measures this assumption yet.
Evidence for
- More Personal Computing revenue declined 4.4% year over year in Q4 FY2026, showing part of the franchise is already in secular decline.[MSFT FY26 Q4 press release]· primary
- The 10-year Treasury yielded about 4.66% on August 7, 2026, capping any defensible perpetual growth rate well below that level.[Federal Reserve H.15, August 7, 2026]· primary
Evidence against
- Microsoft's contracted backlog of $678B is more than twice FY2026 revenue, with the portion recognized beyond 12 months up 112% — evidence of durable long-dated demand.[MSFT Q4 FY2026 RPO disclosure]· secondary
Base
medium confidence$171.77
IV / share
-66.3% vs $510.12
- Explicit cash flows
- $39.78
- Terminal value
- $133.09
- Net cash
- -$1.10
- Intrinsic value / share
- $171.77
77.5% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth16.0% → 14.0% → 12.0% → 10.0% → 8.5%high
How derived: Management guided fiscal Q1 2027 revenue of $89.85B–$90.95B, or 16–17% growth, off FY2026 revenue of $331.8B, so year one anchors to that guided rate and then decays gradually toward high single digits as Azure's $100B+ run rate makes each incremental point of growth harder — a slower fade than the bear case because $678B of contracted backlog with 30% recognizable within twelve months underpins the first two years.
Why this confidence: Year-one rate is anchored to explicit management revenue guidance ↑, Five consecutive quarters of mid-to-high-teens reported growth ↑, $678B contracted backlog gives visibility into near-term years ↑, Years 3–5 rest on a judged decay curve, not disclosure ↓
No tracked driver measures this assumption yet.
Price implies: 41.6% vs our 12.1% — one of several sets that fit this price
Evidence for
- Microsoft guided fiscal Q1 2027 revenue of $89.85B–$90.95B, representing 16–17% growth.[MSFT Q4 FY2026 earnings call transcript]· primary
- Commercial RPO reached $678B with roughly 30% expected to convert to revenue within the next twelve months, up 37% year over year.[MSFT Q4 FY2026 RPO disclosure]· secondary
- Reported year-over-year revenue growth was 16.0%, 18.4%, 16.7%, 18.3% and 18% across the last five quarters — a consistently mid-to-high-teens run rate.[MSFT FY2026 quarterly results]· primary
Evidence against
- More Personal Computing revenue fell 4.4% in Q4 FY2026, a drag that partly offsets cloud strength in the consolidated growth rate.[MSFT FY26 Q4 press release]· primary
- About 45% of commercial RPO is attributable to OpenAI, so the backlog underpinning years one and two is less diversified than headline growth suggests.[Analysis of Microsoft's OpenAI concentration]· secondary
Operating margin46.0%high
How derived: FY2026 operating income of $155.2B on revenue of $331.8B is a 46.8% margin, and this case holds close to that level — assuming the depreciation drag from the AI buildout is roughly offset by Azure's scale economics and by the FY2027 extension of data-center useful lives from 15 to 25 years, which management said benefits FY2027 operating income.
Why this confidence: Anchored to a reported full-year margin, not an estimate ↑, Eight quarters of margin within a narrow band ↑, Management disclosed the depreciation-life change and its direction ↑, Sequential intra-year compression cuts against a flat assumption ↓
No tracked driver measures this assumption yet.
Evidence for
- FY2026 operating income grew 21% to $155.2B versus 18% revenue growth, so margin expanded on a full-year basis.[MSFT FY26 Q4 press release]· primary
- Effective FY2027 Microsoft extends data-center and office-building useful lives from 15 to 25 years, which management said provides a benefit to FY2027 operating income.[MSFT Q4 FY2026 earnings call transcript]· primary
- Quarterly operating margin has stayed within a tight 45%–49% band across the last eight reported quarters.[MSFT FY26 Q3 Form 10-Q]· primary
Evidence against
- Operating margin declined every quarter of FY2026, from 48.9% in Q1 to roughly 45.1% in Q4, suggesting the trend is downward rather than flat.[MSFT FY2026 quarterly results]· primary
- Roughly $25B of Microsoft's calendar-2026 capex reflects higher component pricing, raising the cost basis that will be depreciated against future revenue.[MSFT Q3 FY2026 capex commentary]· secondary
Tax rate19.5%high
How derived: FY2026's $32.185B tax provision against $133.749B of net income implies a pre-tax base of about $165.9B and an effective rate near 19.4%, consistent with the 19.22% reported for the March 2026 quarter, so this case simply carries Microsoft's own realized effective rate forward.
Why this confidence: Computed directly from two reported 10-K line items ↑, Corroborated by the separately reported quarterly effective rate ↑, Deferred-versus-current tax mix could shift the rate over a five-year horizon ↓
No tracked driver measures this assumption yet.
Evidence for
- Microsoft reported FY2026 net income of $133,749M and a total income tax provision of $32,185M, implying an effective rate of about 19.4%.[MSFT FY2026 Form 10-K]· primary
- Microsoft's reported tax rate for the three months ended March 2026 was 19.22%, closely matching the full-year figure.[MSFT quarterly tax rate]· secondary
Evidence against
- Microsoft's FY2026 current taxes fell about 38% while the total provision rose, meaning the reported effective rate is being held up by deferred-tax accounting rather than cash tax.[MSFT income tax analysis]· secondary
Reinvestment rate55.0%medium
How derived: Defined as net reinvestment (capex and acquisitions less depreciation, plus working-capital change) divided by after-tax operating profit, FY2026 NOPAT was about $125B against guided FY2027 capex and finance leases near $175B; because a growing share of that gross spend replaces depreciating assets rather than adding new capacity, and management said Microsoft stays cash-flow positive in FY2027, net reinvestment lands near half of NOPAT.
Why this confidence: FY2027 gross capex explicitly guided by the CFO ↑, Management's cash-flow-positive statement bounds the net figure ↑, Splitting maintenance from growth capex requires judgment ↓, Lease reclassification changes what counts as capex year to year ↓
No tracked driver measures this assumption yet.
Evidence for
- Amy Hood said Microsoft should remain cash-flow positive in fiscal 2027 despite roughly $175B of capital expenditures and finance leases.[MSFT Q4 FY2026 earnings call transcript]· primary
- Microsoft returned $10.2B to shareholders through dividends and buybacks in Q4 FY2026 while funding the buildout, evidencing capital left over after reinvestment.[MSFT FY26 Q4 press release]· primary
Evidence against
- Hood guided to further growth in capital expenditures in FY2027 citing demand signals across the portfolio, so reinvestment may not plateau at half of NOPAT.[MSFT Q4 FY2026 earnings call]· primary
- Microsoft's capex run rate roughly doubled to about $190B on an annualized basis during fiscal 2026, a rate of increase far ahead of profit growth.[Microsoft AI capex analysis]· secondary
Terminal growth3.0%medium
How derived: With the 10-year Treasury at about 4.66%, perpetual growth is capped below that; this case uses roughly nominal long-run GDP growth, reflecting that Microsoft's mature software franchise (Microsoft 365 commercial cloud grew 16% adjusted in Q4 FY2026) should track the broad economy once the AI infrastructure cycle normalizes.
Why this confidence: Bounded by an observable risk-free rate from a primary source ↑, Consistent with reported growth in the mature Microsoft 365 franchise ↑, Perpetuity assumptions cannot be verified against any disclosure ↓
No tracked driver measures this assumption yet.
Evidence for
- The 10-year Treasury yielded roughly 4.66% on August 7, 2026, leaving ample headroom above a 3% perpetual growth assumption.[Federal Reserve H.15, August 7, 2026]· primary
- Microsoft 365 commercial cloud revenue grew 16% on an adjusted basis in Q4 FY2026, showing the non-AI core still compounds above inflation.[MSFT FY26 Q4 press release]· primary
Evidence against
- The More Personal Computing segment shrank 4.4% year over year in Q4 FY2026, a structural drag on the consolidated long-run rate.[MSFT FY26 Q4 press release]· primary
Bull
low confidence$284.04
IV / share
-44.3% vs $510.12
- Explicit cash flows
- $58.82
- Terminal value
- $226.32
- Net cash
- -$1.10
- Intrinsic value / share
- $284.04
79.7% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth19.0% → 18.0% → 15.5% → 13.0% → 11.0%medium
How derived: Azure accelerated to 43% growth in Q4 FY2026 and crossed a $100B annualized run rate while management said demand still exceeds supply, and the portion of the $678B backlog recognizable beyond twelve months grew 112%; this case assumes Microsoft converts capacity faster than guided so consolidated growth runs above the 18% FY2026 rate before decaying only to low double digits.
Why this confidence: Azure growth acceleration and the supply-constrained comment are disclosed by management ↑, Long-dated backlog growth of 112% supports later forecast years ↑, Assumed rate exceeds the company's own near-term guidance ↓, Sustaining above-18% growth on a $330B base has no precedent in Microsoft's history ↓
No tracked driver measures this assumption yet.
Evidence for
- Azure grew 43% in Q4 FY2026 — an acceleration from 40% in Q3 — and crossed a $100B annualized revenue run rate.[MSFT FY26 Q4 press release]· primary
- The portion of commercial RPO to be recognized beyond the next twelve months increased 112%, indicating a lengthening pipeline of committed revenue.[MSFT Q4 FY2026 RPO disclosure]· secondary
- Management said Azure acceleration was driven by efficiency gains across the CPU and GPU fleet and shorter lead times to bring new capacity online, with demand still exceeding supply.[MSFT Q4 FY2026 earnings call transcript]· primary
Evidence against
- Microsoft's own Q1 FY2027 guidance of 16–17% growth is below this case's 19% first-year assumption.[MSFT Q4 FY2026 earnings call transcript]· primary
- Excluding OpenAI, commercial RPO grew 25% rather than 84%, and More Personal Computing revenue declined 4.4%, both capping consolidated upside.[MSFT FY26 Q4 press release]· primary
Operating margin50.0%low
How derived: FY2026 operating income grew 21% against 18% revenue growth to a 46.8% margin, and Microsoft's peak quarterly margin in the period was 48.9%; this case assumes the FY2027 extension of building useful lives from 15 to 25 years plus fleet efficiency gains let margin push past the recent high toward 50% as high-margin software and AI services outgrow the hardware-heavy cost base.
Why this confidence: A near-50% margin has actually been achieved in a recent reported quarter ↑, Assumed level exceeds every full-year margin Microsoft has ever reported ↓, Contradicted by the sequential margin decline through FY2026 ↓, Management explicitly called the depreciation-life benefit minimal ↓
No tracked driver measures this assumption yet.
Evidence for
- Microsoft reported a 48.9% operating margin in Q1 FY2026, demonstrating the business can already run near 50% in a strong quarter.[MSFT FY26 Q1 results]· primary
- Extending data-center and office-building useful lives from 15 to 25 years effective FY2027 reduces annual depreciation expense relative to the prior schedule.[MSFT Q4 FY2026 earnings call transcript]· primary
- Full-year FY2026 operating income rose 21% versus 18% revenue growth, evidencing positive operating leverage.[MSFT FY26 Q4 press release]· primary
Evidence against
- Operating margin fell in each successive quarter of FY2026, ending near 45.1% in Q4 — the opposite of the expansion this case assumes.[MSFT FY2026 quarterly results]· primary
- Management characterised the FY2027 useful-life benefit to operating income as minimal, limiting how much margin relief it provides.[MSFT Q4 FY2026 earnings call]· primary
Tax rate18.0%medium
How derived: Microsoft's realized FY2026 effective rate was about 19.4% ($32.185B provision on roughly $165.9B of pre-tax income), and this case shades it modestly lower on the view that accelerated depreciation on the AI fleet — which drove the federal cash tax rate to about 2.44% — plus R&D credits keep the book rate at the low end of Microsoft's historical range.
Why this confidence: Grounded in Microsoft's own reported provision and cash tax position ↑, Assumed rate sits below the actually reported effective rate ↓, Depends on continuation of current tax legislation over five years ↓
No tracked driver measures this assumption yet.
Evidence for
- Microsoft paid an effective federal income tax rate of about 2.44% on U.S. income in FY2026, driven by accelerated depreciation and R&D credits.[ITEP analysis of Microsoft FY2026 taxes]· secondary
- Microsoft's FY2026 current taxes fell roughly 38% from the prior year's peak, with the higher total provision driven by deferred-tax accounting.[MSFT income tax analysis]· secondary
Evidence against
- Microsoft's actual reported effective rate was 19.22% in the March 2026 quarter and about 19.4% for FY2026, above the 18% assumed here.[MSFT FY2026 Form 10-K]· primary
Reinvestment rate45.0%low
How derived: Taking net reinvestment as a share of after-tax operating profit, FY2026 NOPAT of roughly $125B supported the buildout while Microsoft still returned $10.2B to shareholders in Q4 alone; this case assumes management's disclosed CPU/GPU fleet efficiency gains and shorter capacity lead times raise revenue per dollar of capex, so growth costs less than in the base case.
Why this confidence: Fleet-efficiency and lead-time improvements are management-disclosed ↑, Directly contradicted by guided FY2027 capex growth ↓, Requires a capital-productivity inflection that has not yet appeared in reported cash flows ↓, Lease-accounting shifts make the metric hard to compare across years ↓
No tracked driver measures this assumption yet.
Evidence for
- Management attributed Azure's acceleration to significant efficiency gains across the CPU and GPU fleet and process improvements that reduced lead time for bringing new capacity online.[MSFT Q4 FY2026 earnings call transcript]· primary
- Microsoft expects to shift more future data-center leases to operating leases rather than finance leases, reducing capitalised reinvestment.[MSFT Q4 FY2026 earnings call]· primary
Evidence against
- Amy Hood guided to roughly $175B of FY2027 capital expenditures and finance leases and said she sees further growth in capex beyond that.[MSFT Q4 FY2026 earnings call transcript]· primary
- Microsoft's capex run rate roughly doubled to about $190B annualized during fiscal 2026, far outpacing profit growth.[Microsoft AI capex analysis]· secondary
Terminal growth3.5%low
How derived: The 10-year Treasury at about 4.66% sets the ceiling, and this case uses a rate modestly above nominal GDP on the view that Microsoft's $678B contracted backlog — more than twice FY2026 revenue, with the beyond-12-month portion up 112% — reflects a platform whose share of enterprise IT spending keeps rising past the forecast window.
Why this confidence: Constrained below an observable risk-free rate ↑, Assumes perpetual growth above nominal GDP, which no firm can sustain indefinitely ↓, Supporting backlog has only 2.3-year duration and heavy single-customer concentration ↓
No tracked driver measures this assumption yet.
Evidence for
- Commercial RPO of $678B is more than twice Microsoft's $331.84B FY2026 revenue, with the beyond-12-month portion up 112%.[MSFT Q4 FY2026 RPO disclosure]· secondary
- The 3.5% assumption remains well below the 4.66% ten-year Treasury yield, satisfying the standard perpetuity constraint.[Federal Reserve H.15, August 7, 2026]· primary
Evidence against
- The RPO underpinning this view has a weighted-average duration of only 2.3 years and roughly 45% is tied to a single counterparty, so it is weak evidence about perpetual growth.[MSFT Q4 FY2026 earnings call transcript]· primary
- More Personal Computing revenue declined 4.4% year over year, a permanent drag on the consolidated long-run rate.[MSFT FY26 Q4 press release]· primary
Valuation robustness
reliability of the estimate, not a stock rating67 / 100 · Moderate
Formula v1.0.0. Higher means a more reliable estimate — not a recommendation.
Quality checks
Automated model-risk flags — warnings, not recommendations.
- 77% of the intrinsic value rests on the terminal value — a small change to terminal growth moves the valuation a lot.→ terminal growth
Per-share economics
Business growth after changes in the diluted share count.
| Period | Revenue growth | FCF/share | FCF/share growth | Shares | Share growth |
|---|---|---|---|---|---|
| Q1 2025 | 16.0% | 2.58 | -6.9% | 7.47B | 0.1% |
| Q2 2025 | 12.3% | 0.87 | -28.9% | 7.47B | 0.0% |
| Q3 2025 | 13.3% | 2.72 | -3.0% | 7.46B | -0.1% |
| Q1 2026 | 18.4% | 3.44 | 33.3% | 7.47B | -0.1% |
| Q2 2026 | 16.7% | 0.79 | -9.2% | 7.46B | -0.1% |
| Q3 2026 | 18.3% | 2.12 | -22.0% | 7.45B | -0.2% |
Valuation history every run
Why intrinsic value changed
Why
No sourced event is linked to this change yet — the researched assumption moved without a cited driver observation behind it.
Why
No sourced event is linked to this change yet — the researched assumption moved without a cited driver observation behind it.
Why
No sourced event is linked to this change yet — the researched assumption moved without a cited driver observation behind it.
Why
No sourced event is linked to this change yet — the researched assumption moved without a cited driver observation behind it.
Sequential deterministic bridge · order-dependent contributions · exactly reconciled
Market inputs researched
The 10-year US Treasury constant maturity yield was approximately 4.66% on August 7, 2026, the standard risk-free proxy for a USD-denominated DCF matched to a multi-year forecast horizon.
Microsoft's five-year monthly beta against the S&P 500 is reported at 1.10, slightly above the market, reflecting a mega-cap software franchise with recurring revenue but increasing exposure to the AI capex cycle.
Damodaran's forward-looking implied equity risk premium for the US market, backed out of current S&P 500 prices and expected cash flows, was 4.23% as of January 2026.
Microsoft's last closing share price was $499.99 on August 7, 2026, the most recent market close before this valuation date.
Generated 8/9/2026, 1:52:23 PM · pipeline v1.1.0