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MS

Microsoft Corporation

MSFT

Technology · Software - Infrastructure · NASDAQ

$464.72

P/E 23.8×

CEO

Satya Nadella

Sector

Technology

Industry

Software - Infrastructure

Microsoft Corporation is a prominent global technology firm that invents, markets, and provides ongoing assistance for a diverse range of software, digital services, computing devices, and comprehensive solutions. Its operations are organized into three primary divisions: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The Productivity and Business Processes segment delivers crucial tools for both enterprises and individual users. This includes the extensive Office suite (comprising Exchange, SharePoint, Microsoft Teams, Office 365 Security and Compliance, Microsoft Viva, and Skype for Business), along with popular consumer offerings like Skype, Outlook.com, OneDrive, and LinkedIn. It also features Dynamics 365, a suite of integrated cloud and on-premises business applications tailored for organizations. The Intelligent Cloud division focuses on sophisticated infrastructure and platform services. Here, Microsoft licenses key products such as SQL Server, Windows Servers, Visual Studio, System Center, and associated Client Access Licenses. It also includes GitHub, a leading platform for developer collaboration and code hosting; Nuance, offering advanced AI solutions for healthcare and businesses; and Azure, its expansive cloud computing platform. This segment further encompasses enterprise support, Microsoft consulting services, and Nuance professional services, assisting clients with the development, deployment, and management of Microsoft's server and desktop technologies, alongside offering product training and certification. Finally, the More Personal Computing segment covers a broad spectrum of consumer and commercial computing experiences. It generates revenue through Windows operating system licensing, including agreements with original equipment manufacturers (OEMs), non-volume licensing, and various Windows Commercial offerings (such as volume licensing and cloud services), as well as patent licensing and Windows Internet of Things (IoT). This division also supplies its own hardware, including Surface devices, PC accessories, and gaming/entertainment consoles. Its Gaming portfolio features Xbox hardware, content, and subscription services, in addition to video games and royalties from third-party titles. Furthermore, it manages search services like Bing and Microsoft's advertising platforms. Microsoft distributes its extensive product line via numerous channels, including original equipment manufacturers, wholesale distributors, and various resellers, complementing direct sales through digital marketplaces, its own online storefronts, and physical retail outlets. The company, established in 1975, maintains its headquarters in Redmond, Washington.

Investor model analysis

Investor Valuation

Intrinsic Value (DCF)

Warren Buffett's valuation model · select an investor above to switch

Strong Buffett candidate. Shows characteristics of a wonderful business.

Intrinsic Value (DCF)

$138.71

Buy Below

$104.03

Strong Buy Below

$69.36

Margin of Safety

-70.2%

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Market expectations

What the market is pricing in

The yearly growth rate today's price already assumes — and what that means for a buyer

19.9%/yr

Implied FCF growth

High expectations, high risk

The market expects near-perfect execution

What this means for you

The price assumes almost everything goes right — little cushion if Microsoft Corporation stumbles.

This is the yearly growth today's price already assumes if it holds for 10 years, then levels off to a steady 3% — the standard long-term DCF horizon.

Market is pricing in

19.9%/yr

Microsoft Corporation's 5-yr track record

3.6%/yr

Today's price assumes Microsoft Corporation grows FCF 19.9%/yr. Over the last 5 years it grew 3.6%/yr — so the market's bar sits above its own track record.

FCF is noisier than earnings year-to-year, so treat a single year with caution — the 5-year track record is the anchor.

Scenario analysis

Bear, base & bull

Three growth assumptions, three fair values — and where today's price lands

Checklist highlights

Buffett model checklist

Top criteria from the Buffett analysis — select an investor below for all models

Return on Equity

ROE measures how efficiently the company uses shareholder equity. Buffett looks for consistent ROE above 15%, indicating a durable competitive advantage.

ROE Consistency

Consistent high ROE over many years suggests a durable moat. Buffett demands durability — at most one weak year is acceptable.

ROE Quality (Low Leverage)

Buffett prefers high ROE generated by business quality, not financial leverage.

Debt Levels

Buffett prefers companies that could pay off all debt within 3-4 years of free cash flow. Uses 3-year average FCF to smooth one-off fluctuations.

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Sell signals & exit criteria

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Company financials

5-Year Financials

Income statement highlights — annual, USD

Metric20262025202420232022
Revenue$331.8B
$281.7B
$245.1B
$211.9B
$198.3B
Rev. Growth-15.1%-13.0%-13.5%-6.4%
Net Income$133.7B$101.8B$88.1B$72.4B$72.7B
Net Margin40.3%36.1%36.0%34.1%36.7%
EPS (Diluted)$18.00$13.70$11.86$9.72$9.70
Free Cash Flow████████████████████

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Educational Use Only · Not Financial Advice

Analysis, scores, valuations, and buy zones are derived from publicly documented investor frameworks (Buffett, Lynch, Benjamin Graham, Phil Town) for learning purposes only. They are not recommendations from licensed financial advisors. Past performance does not guarantee future results. Prices may be delayed up to 15 minutes. Always conduct your own research before making any investment decisions.