Microsoft Corporation
Orin's own judgment of how firmly the evidence points one way — not the chance the price goes up.
Microsoft remains a buy heading into Q4 2026 after FY2026 (ended 30 Jun) demonstrated that the AI capex cycle is converting into earnings at scale: revenue grew 17.8% to $331.8B, EPS surged 31.6% to $17.95, and operating margin expanded to 46.8% from 45.6% the prior year.
The stock trades at 28.28x trailing earnings — roughly in line with the peer median of 28.59x — while EV/EBITDA of 18.73x sits 20.7% below the peer median of 23.63x, offering reasonable value for a franchise delivering double-digit revenue growth and 31.6% EPS growth. The principal tension is that capex nearly doubled to $115.9B, compressing FCF margin to 20.2% from 25.4% in FY2025 and pushing total debt to $128.8B, yet Q4 revenue of $90.0B (up 17.7% YoY) and consistent EPS beats — including a 12.6% surprise in the most recent reported quarter — suggest demand is absorbing the capacity buildout. Technicals are constructive with the stock at $517.53 above both its 50-day ($487.72) and 200-day ($432.83) moving averages, though RSI at 62.6 signals moderately extended conditions.
What could go wrong
- FCF compression persists. Capex of $115.9B in FY2026 nearly doubled from $64.6B in FY2025, cutting FCF to $67.0B (20.2% margin from 25.4%); if returns on this investment lag, FCF could remain depressed for multiple quarters.
- Smart money fading. Smart money score declined from 0.62 (Q2 2025) to 0.19 (Q2 2026) per 13F composite as of 30 Jun, suggesting institutional conviction is weakening even as the stock rallies.
- EU regulatory overhang. Recent news (2 Oct) highlights new EU regulatory scrutiny on major cloud providers including Microsoft, which could impose additional compliance costs or operating restrictions in a key market.
- Extended technicals. RSI at 62.6 and price well above the 200-day MA of $432.83 leave limited margin for near-term pullback risk after a strong run, though not yet at overbought extremes.
What would change my mind
Where this comes from: FY26 fundamentals · FY25 and FY26 fundamentals · Q4 FY26 results · peer comparison. Orin's read on MSFT; not advice.
How has the share price moved?
Unchanged over twelve months, from $531.52 on 27 Oct 2025 to $531.33 at the Tue 27 Oct 2026 close. Its highest close in that time was $543.45 on 13 Oct 2026; the last close is 2.2% below it.
- Green line: the closing price each trading day.
- Grey line: the average closing price over the last 50 trading days.
- Dashed amber line: the same over the last 200 trading days — a slower, smoother line.
- Bars along the bottom: shares traded each day — green when it closed higher than the day before, rose when lower (the most, 186.2M, on 26 Jun 2026).
- Flags: the company's filings, on the day they were made (a 10-Q is the quarterly report and a 10-K the annual report; an 8-K reports a major event).
- Rose flags: large share sales by the company's own officers and directors, from the Form 4 each one files after trading.
On file
All MSFT filingsLargest holders · 13F Q2 2026
Money flow| Filer | Position | Of fund |
|---|---|---|
| BlackRock | $226.6B | 3.4% |
| Vanguard Capital Management | $181.0B | 3.9% |
| State Street | $117.7B | 3.5% |
| Geode Capital Management | $70.6B | 3.8% |
| FMR | $69.4B | 3.0% |
| Vanguard Portfolio Management | $62.8B | 2.8% |
| JPMorgan Chase | $49.8B | 2.8% |
| Morgan Stanley | $47.6B | 2.5% |
| Norges Bank | $38.3B | 3.8% |
| Invesco | $37.4B | 3.0% |
306 of the 815 filers we track · quarter ended Q2 2026 · positions, not flows
Insiders, last 24 months: 252 Form 4 filings; open-market trades net −$255.8M. Of the 50 on hand, 0 were open-market purchases and 17 sales — the rest are grants, option exercises and tax withholding.
Ask Orin about MSFT
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Start 3 free days →How is it priced, against its own past and its sector?
Priced at 29.5× its last 12 months of profit (Tue 27 Oct close) — higher than in 2 of its last 5 fiscal years (middle 35.0×); the typical Technology company on the NASDAQ is at 46.1×.
| Measure | Now | Its usual | Sector |
|---|---|---|---|
| P/E | 29.5×below usual | 35.0× | 46.1× |
| P/S | 11.9×near usual | 12.0× | — |
| EV/EBITDA | 19.1×below usual | 23.6× | — |
| P/B | 8.9×below usual | 11.6× | — |
- "Its usual" is the middle of its own last 5 fiscal years.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
P/S: the company's total market value divided by one year of revenue. Used when there is no profit to measure.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
P/B: the share price divided by the book value per share — what the company owns minus what it owes, as its accounts record it. When book value is tiny, P/B swings wildly and says little.
What do the analysts who cover it publish?
The analysts' average 12-month price target is $599 (from $440 to $725) — 13% above the Tue 27 Oct close price. That is their published opinion, not Orin's.
$599
$440 – $725 · +13% against the last close
- 35 buy or overweight
- 2 hold
- 0 underweight or sell
Price target: the share price an analyst publishes for about 12 months ahead. It is the opinion of the firm that wrote it; the average is across the firms that cover the company.
Overweight / underweight: analysts' rating words: overweight means the firm expects the stock to do better than the others it covers, underweight worse. Their words, not Orin's.
How is it priced next to the companies it is compared to?
Priced at 29.5× its last 12 months of profit; the middle P/E of the 9 companies it is compared to that made a profit is 20.1×.
| Company | Market value | P/E | EV/EBITDA | Gross margin | Net margin | ROE |
|---|---|---|---|---|---|---|
| MSFTMicrosoft Corporation | $3.95T | 29.5× | 19.1× | 67.9% | 40.3% | 33% |
| ACNAccenture plc | $144B | 17.2× | 10.9× | 32.0% | 11.3% | 27% |
| ADBEAdobe Inc. | $97B | 13.8× | 9.7× | 89.1% | 28.0% | 63% |
| AMZNAmazon.com, Inc. | $2.73T | 20.1× | 11.3× | 50.8% | 17.4% | 30% |
| CRMSalesforce, Inc. | $198B | 21.9× | 13.8× | 77.3% | 22.0% | 20% |
| CTSHCognizant Technology Solutions Corporation | $30B | 14.2× | 7.5× | 32.0% | 10.3% | 15% |
| GOOGAlphabet Inc. | $3.87T | 15.7× | 12.1× | 60.9% | 54.8% | 51% |
| IBMInternational Business Machines Corporation | $237B | 21.0× | 16.6× | 58.0% | 16.0% | 33% |
| NOWServiceNow, Inc. | $160B | 96.1× | 47.6× | 74.8% | 11.3% | 14% |
| ORCLOracle Corporation | $395B | 20.1× | 13.6× | 63.9% | 26.4% | 43% |
- The list of companies is the data vendor's choice, so it can include a company a person would not have picked.
Market value: the share price times the number of shares — what the whole company is priced at.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
Gross margin: the share of each $1 of sales left after the direct cost of making what was sold.
Net margin: the share of each $1 of sales kept as profit after every cost. Below zero, the company lost money.
ROE: return on equity: one year of profit as a share of the shareholders' money in the business (its book value).
Is it priced high or low compared with its own past?
Priced at 29.5× its last 12 months of profit (Tue 27 Oct close). It has no full fiscal year on file since its history starts, so there is nothing of its own to compare with.
- Now29.5×
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
Fiscal year (FY): the company's own 12-month accounting year, which need not match the calendar year.
How has its sector been priced?
Technology companies on the NASDAQ were priced at a typical 46.1× their yearly profit (Tue 27 Oct close).
- Now46.1×
- Each year is the middle of that calendar year's daily sector P/E; "Now" is the Tue 27 Oct close figure, the same one in the table above.
Sector P/E: the middle P/E of the companies in the same sector on the same stock exchange, as the data vendor works it out each day.
What does a cash-flow model say a share is worth?
A standard cash-flow model puts it at $281 a share — 47% below the $532.20 price it was computed against (27 Oct).
| Model | Value a share | Against the price then |
|---|---|---|
| Standard | $281 | 47% below $532.20 |
| Levered | $313 | 41% below $532.20 |
Discounted cash flow: a model's estimate of what the company is worth today, from the cash it is forecast to make in future years. Small changes in the forecast move it a lot, and it says little about a company that loses money.
Standard / levered: two versions of the cash-flow model: the standard one counts the cash before the company pays its lenders, the levered one after.