Highly Regarded

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 33.7× TTM earnings — a 65% discount to its Technology sector average of 96.3× in our coverage.

The Numbers

P/E (TTM)

33.7×

Sector avg: 96.3×

P/S (TTM)

13.1×

Sector avg: 22.2×

Market Cap

$4.00T

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)
MSFT This page $539.24 33.7×
NVDA $217.23 53.8×
AAPL $341.95 43.3×
AVGO $344.31 72.2×
AMD $562.16 212.1×
PLTR $200.48 466.2×
INTC $95.36 —
CSCO $109.85 42.4×
ORCL $134.50 31.1×
TXN $279.15 51.2×
CRM $246.71 35.8×
QCOM $178.39 36.0×
ADBE $251.65 15.1×

Is the Discount Justified?

October 11, 2026

Microsoft Corporation's P/E ratio of 33.5x represents a notable discount compared to the technology sector average of 94.8x. This difference can be attributed to Microsoft's substantial size and relative maturity within the sector, which, despite its robust growth, may not command the extreme multiples seen in some smaller, hyper-growth tech companies. Microsoft's valuation is supported by its dominant cloud computing platform, Azure, strong enterprise software presence, and leading position in AI integration. The company's "hybrid intelligence" strategy, which pushes AI workloads across PCs and the cloud, and the strong adoption of products like Microsoft 365 Copilot, continue to drive strong financial performance and justify its premium over many other industries.

Sources

Frequently Asked Questions

Is MSFT overvalued or undervalued?
On trailing-twelve-month earnings, MSFT trades at 33.7x versus a Technology sector average of 96.3x 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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