Is Microsoft Corporation (MSFT) Stock Undervalued or Overvalued?

Trailing-twelve-month multiples vs Technology sector peers in our coverage

65% Discount TTM fundamentals · sector averages from covered peers

MSFT trades at 31.7× TTM earnings — a 65% discount to its Technology sector average of 90.7× in our coverage.

The Numbers

P/E (TTM)

31.7×

Sector avg: 90.7×

P/S (TTM)

12.3×

Sector avg: 21.2×

Market Cap

$3.77T

EPS (TTM): $15.98

Revenue (TTM)

$305.45B

Net income: $119.26B

Technology Peer Comparison

How MSFT's multiples stack up against sector peers we cover. Click any peer for its own valuation breakdown.

Stock	Price	P/E (TTM)	P/S (TTM)	Market Cap
MSFT This page	$507.14	31.7×	12.3×	$3.77T
NVDA NVIDIA Corporation	$220.92	54.7×	28.7×	$5.37T
AAPL Apple Inc.	$316.83	40.1×	10.7×	$4.65T
AVGO Broadcom Inc.	$370.45	77.7×	27.5×	$1.76T
AMD Advanced Micro Devices Inc.	$470.95	177.7×	22.2×	$767.84B
INTC Intel Corporation	$89.54	—	8.5×	$447.27B
PLTR Palantir Technologies Inc.	$186.32	433.3×	114.0×	$444.08B
CSCO Cisco Systems Inc.	$110.47	42.7×	7.6×	$436.48B
ORCL Oracle Corporation	$149.14	34.5×	7.3×	$428.64B
CRM Salesforce Inc.	$257.65	37.4×	6.1×	$241.42B
TXN Texas Instruments Inc.	$260.82	47.9×	13.4×	$236.71B
QCOM Qualcomm Inc.	$170.46	34.4×	4.1×	$181.88B
ADBE Adobe Inc.	$292.76	17.5×	5.1×	$120.18B

Is the Discount Justified?

August 9, 2026

Microsoft Corporation (MSFT) currently trades at a trailing twelve-month (TTM) Price/Earnings (P/E) multiple of 31.3x, which is notably below the Technology sector average of 84.1x. This valuation reflects Microsoft's established market leadership and consistent, diversified growth. The company reported strong Q4 FY26 results, with revenue and earnings surpassing expectations, driven by robust performance in its Intelligent Cloud segment, particularly Azure, and continued strength in Productivity and Business Processes. Microsoft's significant investments and leadership in artificial intelligence (AI), including its partnership with OpenAI, are key catalysts, positioning it to capitalize on the generative AI boom and drive demand across its cloud services and software offerings. The company's highly scalable software and cloud business model supports strong operating margins and free cash flow generation. While its P/E is below the stated sector average, the 31.3x multiple is justified by its predictable revenue streams, strong competitive position, and clear long-term growth opportunities in critical technology domains.

Sources

Frequently Asked Questions

Is MSFT overvalued or undervalued?

On trailing-twelve-month earnings, MSFT trades at 31.7x versus a Technology sector average of 90.7x in our coverage — a 65% discount. Whether that's justified depends on growth, margins, and risk; see the context above.

What does the P/E ratio tell you?

Price-to-earnings compares a company's share price with its per-share profits. A higher multiple means investors pay more per dollar of earnings — often for faster expected growth — while a lower one can signal slower growth or higher perceived risk.

Why compare against the sector average?

Valuation multiples vary structurally between industries — software typically trades richer than banks or energy. Comparing MSFT with its own Technology peers is more informative than comparing against the whole market.

Is a cheap stock automatically a good buy?

No. A discount can be justified by weak growth or elevated risk (a "value trap"), and a premium can be earned by quality and consistency. Valuation is one input — pair it with the fundamentals and the AI context on this page.

Methodology

Multiples are computed from trailing-twelve-month fundamentals (from company filings) and the latest share price: P/E is price ÷ diluted EPS, and P/S is market cap ÷ revenue. Sector averages use the Technology names in our 50-stock coverage with positive earnings — a deliberately like-for-like, if imperfect, benchmark.

Stocks with negative trailing earnings are compared on price-to-sales instead. Multiples update with prices and fundamentals; AI context refreshes weekly.

Not Financial Advice

This page is for education and information only. Indicators are mechanical calculations, AI commentary can contain errors, and nothing here is a recommendation to buy or sell any security. Do your own research and consider consulting a qualified financial advisor. See our full disclaimer.

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