MSFT
MICROSOFT CORPNasdaqThree independently researched cases — bear, base, and bull — generated automatically from published financials. Every assumption is justified and cited; the discount rate is computed from researched market inputs.
Market vs intrinsic value as of valuation
Compared against the researched share price for MSFT; recalculate the valuation to refresh it.
Base inputs from financials
source period →Base revenue (TTM)
$318.3B
Diluted shares
7,445,000,000
Net cash
-$8.2B
Bear
medium confidence$76.81
IV / share
-80.5% vs $393.82
Revenue growth12.0% → 11.0% → 10.0% → 8.0% → 6.0%medium
The bear path assumes AI capacity demand remains strong but decelerates below consensus because elevated AI capex and possible software disruption weigh on growth.
Operating margin42.0%medium
Margin is set below recent levels to reflect continued AI infrastructure depreciation, usage costs, and weaker mix.
Tax rate20.0%medium
A modest premium to guidance allows for less favorable geographic and tax-credit mix.
Reinvestment rate70.0%medium
The bear case assumes capacity shortages force heavy reinvestment while monetization lags.
Terminal growth2.5%medium
Terminal growth is kept below nominal GDP-like long-run assumptions because mature mega-cap growth should fade under a conservative case.
Base
medium confidence$170.37
IV / share
-56.7% vs $393.82
Revenue growth16.0% → 16.5% → 18.0% → 14.0% → 11.0%high
The base path tracks consensus growth through FY2028 and then tapers as Azure and AI scale into a larger revenue base.
Operating margin46.0%high
The base margin aligns with current consensus and recent quarterly operating margins near the mid-0.40s.
Tax rate19.0%high
Management's latest near-term tax guidance is the best anchor for a normalized base case.
Reinvestment rate55.0%medium
The base case reflects a high AI buildout phase with roughly half of operating economics reinvested.
Terminal growth3.0%medium
A 0.03 terminal rate is consistent with a mature global software and cloud leader growing below current nominal risk-free yields.
Bull
medium confidence$263.87
IV / share
-33.0% vs $393.82
Revenue growth20.0% → 20.0% → 19.0% → 16.0% → 13.0%medium
The bull path assumes AI capacity expansion unlocks sustained Azure and Copilot monetization above consensus before normal tapering.
Operating margin49.0%medium
The bull case assumes AI infrastructure utilization improves and high-margin software mix offsets depreciation pressure.
Tax rate18.0%medium
A slightly lower rate assumes favorable geographic profit mix and continued tax planning benefits.
Reinvestment rate45.0%medium
The bull case assumes stronger utilization and pricing allow more growth per dollar of reinvestment after the current buildout.
Terminal growth3.5%medium
The bull terminal rate assumes Microsoft retains a structurally advantaged position in enterprise AI and cloud while still staying below the risk-free yield.
Market inputs researched
The 10-year U.S. Treasury yield is the standard USD risk-free anchor for a U.S. large-cap DCF.
A market-data beta near 1.1 captures Microsoft's large-cap technology cyclicality while remaining close to broad-market risk.
Kroll's current U.S. ERP recommendation is a widely used valuation input for CAPM-based cost of equity.
July 17, 2026 was the latest U.S. market close before the Sunday July 19, 2026 valuation date.
Generated 7/19/2026, 1:06:05 PM · pipeline v1.0.0