Strong cloud growth, but valuation leaves little room
MSFT · Equity research
AI-assisted research · Data as of 2026-11-05 09:13 UTC · Last session 2026-11-04
RESEARCH VIEW · 3-MONTH HORIZON
Hold
Hold: the forward sales multiple against peers is the decisive gap, with Microsoft priced far above the peer median.
WHAT THE PRICE IMPLIES
Enterprise value is about $4.11T, 11.9× trailing sales of $346B. Our cash-flow grid reaches $1.39T in its most optimistic case and $871B in the middle case: today's price assumes more than the best case.
Computed from daily prices to session 2026-11-04 · descriptive, not a trading signal
MSFT closed at $555.80, 7.9% above its 50-day average and 26.6% above its 200-day average; the 50-day average is above the 200-day. Over the last month the price rose 5.0%, over three months it rose 11.2%. RSI is 64.3, and the average daily range is about 3% of the price.
Close50-day average200-day average
126 sessions2026-11-04 · $555.80
Measure
Value
Reading
Close vs 50-day average
Above; average $515.34
+7.9%
Above; average $515.34
Close vs 200-day average
Above; average $438.99
+26.6%
Above; average $438.99
50-day vs 200-day average
50-day above 200-day
+17.4%
50-day above 200-day
RSI (14)
Scale 0–100; 30 and 70 are the usual bounds
64.3
Scale 0–100; 30 and 70 are the usual bounds
Average true range (14)
Typical daily range, share of price
2.67%
Typical daily range, share of price
Volume vs 20-session median
Session 2026-11-04
2.52×
Session 2026-11-04
Return, 1 month / 3 months
21 and 63 sessions
+5.0% / +11.2%
21 and 63 sessions
52-week range
Close 0.6% below the high
$349.20–$559.15
Close 0.6% below the high
20-session low / high
Recent trading range
$504.96 / $559.15
Recent trading range
Simple moving averages; RSI and average true range use 14-session Wilder smoothing. Daily bars from the report's source snapshot; dividends are not adjusted, and a split inside the window blocks the report. This section is computed, not written by the model.
What drives the case
Agents and infrastructure led reported segment revenue and growth contribution; Azure was the largest product category and its growth made the strongest contribution. Microsoft Three Six Five Cloud also expanded, while Windows OEM and devices weakened; productivity and server licensing and Xbox also declined. These reconciled categories describe the same revenue base and should not be summed across partitions. The supplied figures do not separate acquired growth from organic growth. Geographic revenue grew both in the United States and outside it, with domestic growth faster.
Reportable Segments
Reported quarter ended 2026-09-30. Contributions are percentage points of total-company revenue growth; these partitions overlap and must not be added.
Business category
Revenue
Share of revenue
Year-over-year change
Growth contribution
Agents And Infra
$76.80B
83.22%
+24.52%
+19.47 pp
Devices And Consumer
$15.48B
16.78%
-3.23%
-0.67 pp
Product Categories
Reported quarter ended 2026-09-30. Contributions are percentage points of total-company revenue growth; these partitions overlap and must not be added.
Business category
Revenue
Share of revenue
Year-over-year change
Growth contribution
Azure
$33.16B
35.94%
+48.16%
+13.88 pp
Frontier And Support Services
$2.11B
2.28%
+4.25%
+0.11 pp
Industry Solutions
$5.34B
5.78%
+9.05%
+0.57 pp
Microsoft Three Six Five Cloud
$27.78B
30.10%
+17.24%
+5.26 pp
Productivity And Server Licensing
$8.41B
9.11%
-3.12%
-0.35 pp
Search And Advertising
$6.55B
7.10%
+10.30%
+0.79 pp
Windows OEM And Devices
$3.55B
3.85%
-21.97%
-1.29 pp
XBOX
$5.38B
5.83%
-2.34%
-0.17 pp
Geographies
Reported quarter ended 2026-09-30. Contributions are percentage points of total-company revenue growth; these partitions overlap and must not be added.
Business category
Revenue
Share of revenue
Year-over-year change
Growth contribution
United States
$49.46B
53.60%
+23.41%
+12.08 pp
Outside the United States
$42.82B
46.40%
+13.90%
+6.73 pp
What the price implies
The forward sales multiple is far above the peer median, a premium that requires sustained growth and strong profitability; Microsoft’s broad cloud and productivity platform differs from peers such as Amazon, whose retail and lower-margin mix complicates comparison. The indicative trailing earnings multiple is about the peer range’s upper end, but its EPS bridge is approximate and not forward earnings. The reverse DCF implies a steady free-cash-flow margin far above trailing margins both before and after treating stock compensation as a cash cost, making that burden demanding. The sensitivity uses free cash flow after stock compensation; value is highly sensitive to growth decay, persistent margin, aggregate net reinvestment, WACC and terminal assumptions. No dynamic margin model or reconciled equity bridge is available.
Peers, priced on the same day
Company
P/E (trailing)
EV / sales
Forward EV / sales
TTM net margin
MSFT
29.02×
11.86×
10.38×
41.17%
GOOGL
15.09×
7.29×
6.87×
50.03%
AMZN
21.51×
3.73×
3.59×
16.90%
Earnings quality and cash
Stock compensation is a noncash operating-cash-flow adjustment, while repurchases are a separate financing use; treating compensation as a cash cost further reduces the observed free-cash-flow margin. The latest quarter also had heavy capital spending. Filing data show large operating earnings alongside substantial research and development costs; working-capital and other noncash adjustments remain part of operating cash flow.
Analyst view
Sell-side ratings and price targets as of 2026-11-05 · third-party opinions, not our rating
Of 57 analysts covering MSFT, 52 rate it Buy or Strong Buy, 5 Hold and 0 Sell or Strong Sell. The median price target is $630.00, 13.3% above the last close of $555.80; targets run from $440 to $870.
Ratings · 57 analysts
Strong Buy 12Buy 40Hold 5Sell 0Strong Sell 0
One month ago: the same split. Three months ago: Strong Buy 14, Buy 38, Hold 3.
12-month price targets vs last close
Lowest target
$440.00
−20.8%
Mean target
$633.13
+13.9%
Median target
$630.00
+13.3%
Highest target
$870.00
+56.5%
Rating actions, last seven days
Date
Firm
Rating
Target
2026-10-29
Wells Fargo
2026-10-29
Overweight
$725 → $750
2026-10-29
Truist Securities
2026-10-29
Buy
$600 → $630
2026-10-29
TD Cowen
2026-10-29
Buy
$625 → $650
2026-10-29
StoneX
2026-10-29
Buy
$600 → $630
2026-10-29
Stifel
2026-10-29
Buy
$575 → $650
2026-10-29
Scotiabank
2026-10-29
Sector Outperform
$625 → $650
2026-10-29
RBC Capital
2026-10-29
Outperform
$640 held
2026-10-29
Piper Sandler
2026-10-29
Overweight
$610 → $650
2026-10-29
Oppenheimer
2026-10-29
Outperform
$625 held
2026-10-29
Keybanc
2026-10-29
Overweight
$600 → $630
2026-10-29
Guggenheim
2026-10-29
Buy
$586 → $595
2026-10-29
DA Davidson
2026-10-29
Buy
$550 → $650
Ratings, targets and rating actions as collected by Yahoo Finance. They are forecasts and opinions of third parties, not reported results, and they do not change our rating above. Percentages are measured against the last completed session's close.
News and sentiment
40 headlines naming MSFT, 2026-11-04 to 2026-11-05 · tone set by the model per headline, counted by code
Of 40 headlines between 2026-11-04 and 2026-11-05, 3 read negative for the stock, 27 neutral and 10 positive.
Headlines from the Yahoo Finance news feed that name the company; we do not verify their content. The model labels each headline's tone toward the stock from the headline alone, and code counts the labels. Tone describes coverage, not the outlook.
The strongest counter-case
The valuation leaves Microsoft exposed if cloud demand, capacity deployment or margins disappoint: the implied steady cash-flow margin is far above delivered trailing margins, including after stock compensation. Capital spending is already substantial, and weaker returns on that investment could pressure cash generation despite strong reported earnings. Devices and consumer segment revenue declined, while several product categories weakened. The recent sharp share move is not explained by the available associated news, so it should not be taken as confirmation of improving fundamentals.
What to watch
Check
Now
Risk rises if
Forward EV / sales vs peers’ median
Risk rises if the gap widens without faster growth
10.4× vs 5.2×
the gap widens without faster growth
Free-cash-flow margin after stock compensation
Risk rises if it falls
13.7%
it falls
Next scheduled report: 2027-01-27 (provider calendar, not yet confirmed by the company).
What would change our view
A more constructive view would require primary guidance and subsequent reported evidence that Azure demand is being served, growth remains broad enough to offset weaker categories, and cash generation strengthens relative to earnings after the investment cycle. A more cautious view would follow guidance or results showing slower cloud demand, sustained capacity spending without commensurate cash flow, or further product weakness. Analyst estimate revisions are mixed and secondary; they do not substitute for company disclosures or realized operating results.
Appendix
Full tables for readers who want to check the work. Closed by default.
Cash-flow grid and illustrative path9 cases: growth 11–33% in year one, WACC 8–12%
Year-one revenue growth from the next twelve months' consensus revenue against the trailing twelve, taken in three cases (half of it, all of it and one and a half times it); the excess over 3% halves each later year; trailing free-cash-flow margin after stock compensation persists and is discounted as is; terminal growth 2%, five annual periods, WACC 8-12%. Scenario inputs, not management guidance, an estimated market WACC or calibrated forecasts.
No dynamic margin model, explicit D&A/capex/NWC schedule, acquisitions or calibrated terminal economics. Net reinvestment is an aggregate assumption; no claim of intrinsic fair value or a dated price target.
Historical operating basis: 2025-10-01 to 2026-09-30. This run rate is assumed to apply at the price date; no partial-year/stub-period adjustment is made. Forecast periods below are hypothetical annual steps, not fiscal guidance.
Assumed annual revenue growth
Assumed WACC
Conditional enterprise value
Terminal share of EV
11% in year one, fading to 4%
8%
$971.18B
76.0%
11% in year one, fading to 4%
10%
$725.92B
69.6%
11% in year one, fading to 4%
12%
$578.88B
63.8%
22% in year one, fading to 4%
8%
$1.17T
76.6%
22% in year one, fading to 4%
10%
$870.82B
70.3%
22% in year one, fading to 4%
12%
$692.81B
64.6%
33% in year one, fading to 5%
8%
$1.39T
77.2%
33% in year one, fading to 5%
10%
$1.03T
71.0%
33% in year one, fading to 5%
12%
$820.38B
65.4%
Illustrative cash-flow path
This displays the assumed middle cell for auditability; it is not a preferred forecast.
Earnings and multiple sensitivityEPS ±10%, multiple ±15%
These are mechanical assumptions applied to the current arithmetic EPS bridge and indicative multiple. They have no forecast date and do not predict the report horizon. They are not fair values, price targets, forecasts or calibrated probabilities; the unchanged-input cell simply reproduces the current closing price.
Assumed EPS change
Assumed multiple change
Conditional price
Change vs. last close
-10%
-15%
$425.19
-23.5%
-10%
+0%
$500.22
-10.0%
-10%
+15%
$575.25
+3.5%
+0%
-15%
$472.43
-15.0%
+0%
+0%
$555.80
+0.0%
+0%
+15%
$639.17
+15.0%
+10%
-15%
$519.67
-6.5%
+10%
+0%
$611.38
+10.0%
+10%
+15%
$703.09
+26.5%
Bear, base and bull on this year's revenue
Case
Revenue
Basis
EV / sales
Multiple
Price
Change vs. last close
Bear
$356.26B
forecast less 10%
8.82×
today's less 15%
$426.10
-23.3%
Base
$395.84B
forecast
10.38×
today's
$555.80
+0.0%
Bull
$435.43B
forecast plus 10%
11.94×
today's plus 15%
$702.05
+26.3%
The peer sales multiple differs from this company's by more than 25%, which margins can explain, so these cases stay on today's multiple instead of assuming it converges.
Trailing EPS is the sum of reported periods, so share-count changes make it approximate.
Segments and peer detailsReconciled segments; peers with periods and cash conversion
Peers: chosen by business model for this company; business models and fiscal year-ends differ.
P/E uses trailing EPS summed from reported quarters; EV / sales uses reported debt and cash, on trailing revenue and on this fiscal year's consensus.
How this asset was picked1 of 21 eligible today; catalyst: reported earnings or guidance
Selected from 21 eligible candidates across 30 supported assets. Completed-session move +6.68% (4.30 standard deviations); volume 2.52x the previous 20-session median; median daily dollar volume $10,498m. Catalyst: reported earnings or guidance. Editorial score 80.5/100. Event classification uses dated source metadata, not verified economic impact. Editorial interest is not an investment ranking.
Data coverage and limitationsData quality: partial; what was and was not verified
Read once, applies throughout: every number links to its source; the narrative is model interpretation. Guidance and consensus are forecasts, past price reactions are history, multiples and DCF cases are context — none of it is a fair value, a price target or a probability of profit.
Research dimension
Evidence status
Valuation
P/E on reported earnings
Cash generation
from SEC filings, matched periods
Earnings quality
adjustments read from SEC filings
Benchmark comparison
price returns vs. QQQ and sector ETF
Sensitivity
stated assumptions, not forecasts
Competitive position
limited fixed peer context
Next event
data-provider calendar
Business mix
primary reconciled
Discounted cash flow
stated assumptions, see table
The API response carries each figure's source, period and calculation. Benchmarks use price returns, not dividend-reinvested returns. Trading sessions are not calendar days.
Limitations recorded for this report:
Secondary quote metrics are not independently reconciled with primary SEC facts
Secondary fundamentals publication times are unverified; no historical ML labels
Current session excluded until 16:15 America/New_York; early closes may be delayed
Forward estimates, earnings calendar, macro and social sentiment are not verified
Provider context is secondary; forecasts, schedules and management statements are not realized financial facts.
Provider publication time and revision history may be unavailable; no historical ML labels.
Optional alphavantage calendar: no eligible records; this context remains unknown.
Optional alphavantage transcript: fiscal quarter not selected; this context remains unknown.
FRED macro values use a completed US knowledge date; observation periods are not publication timestamps. No intraday historical or ML-label authority.
Method and sources
AI-assisted research. Every number links to its filing or data provider; the narrative is the model's interpretation, and the rating comes from a fixed rule. Consensus, guidance and schedules are forecasts; scenarios and sensitivities are assumptions, not price targets. This is research, not investment advice.