Revenue by segment flowing through costs to profit (FY2024) | Source: Microsoft FY2024 10-K Filing
FY2024 data from Microsoft FY2024 10-K Filing
| Segment | What They Sell | Revenue | % of Total | Op. Income | Margin |
|---|---|---|---|---|---|
| Intelligent Cloud (Azure) | N/A | $96.0B |
40%
|
$43.0B | 45% |
| Productivity (Office/LinkedIn) | N/A | $78.0B |
33%
|
$38.0B | 49% |
| Personal Computing (Windows/Xbox) | N/A | $64.0B |
27%
|
$18.0B | 28% |
Source: Cash Flow Statement | LFCF = Operating Cash Flow - CapEx - Interest Expense
Fair Value: $613.32
+52.9% Upside
Stock appears undervalued with 52.9% upside to fair value. High confidence based on valuation spread and data quality.
Microsoft Corporation (MSFT) currently trades at $401.14, representing a 52.9% discount to our calculated fair value of $613.32.
Key Strengths: Strong balance sheet (Net Debt/EBITDA: 0.1x); Strong interest coverage (53.9x); High profit margins (53.5%).
Key Risks: No significant concerns identified.
The company generates $53.64B in levered free cash flow annually, providing real cash returns to shareholders. Wall Street consensus is strong_buy with a mean price target of $599.86.
| Criterion | Status | Notes |
|---|---|---|
| ≤4 operating segments | PASS | Segment count estimated from sector classification. Verify in 10-K for accuracy. |
| Top 2 segments ≥70% of revenue | PASS | Revenue concentration estimated. Verify segment breakdown in 10-K. |
| ≤3 material geographic regions | PASS | Most US-listed companies report US vs International (2 regions). |
| No exotic debt instruments or off-balance-sheet complexity | PASS | Review 10-K for convertibles, derivatives, and off-balance-sheet items. |
Recommendation: PROCEED TO VALUATION
Microsoft Corporation develops and supports software, services, devices, and solutions worldwide. The company's Productivity and Business Processes segment offers Microsoft 365 Commercial, Enterprise Mobility + Security, Windows Commercial, Power BI, Exchange, SharePoint, Microsoft Teams, Security and Compliance, and Copilot; Microsoft 365 Commercial products, such as Windows Commercial on-premises and Office licensed services; Microsoft 365 Consumer products and cloud services, such as Microsoft 365 Consumer subscriptions, Office licensed on-premises, and other consumer services; LinkedIn; Dynamics products and cloud services, such as Dynamics 365, cloud-based applications, and on-premises ERP and CRM applications. Its Intelligent Cloud segment provides Server products and cloud services, such as Azure and other cloud services, GitHub, Nuance Healthcare, virtual desktop offerings, and other cloud services; Server products, including SQL and Windows Server, Visual Studio and System Center related Client Access Licenses, and other on-premises offerings; Enterprise and partner services, including Enterprise Support and Nuance professional Services, Industry Solutions, Microsoft Partner Network, and Learning Experience. The company's Personal Computing segment provides Windows and Devices, such as Windows OEM licensing and Devices and Surface and PC accessories; Gaming services and solutions, such as Xbox hardware, content, and services, first- and third-party content Xbox Game Pass, subscriptions, and Cloud Gaming, advertising, and other cloud services; search and news advertising services, such as Bing and Copilot, Microsoft News and Edge, and third-party affiliates. It sells its products through OEMs, distributors, and resellers; and online and retail stores. The company has a collaboration with Richtech Robotics Inc. for the development and deployment of agentic artificial intelligence capabilities in real-world robotic systems. The company was founded in 1975 and is headquartered in Redmond, Washington.
| Market Capitalization | $2981.42B |
| (+) Total Debt | $123.28B |
| (-) Cash & Equivalents | $89.46B |
| Net Debt | $33.82B |
| Enterprise Value | $3015.24B |
| Metric | Value | What It Means |
|---|---|---|
| Net Debt / EBITDA | 0.12x | Very Strong |
| Interest Coverage | 53.9x | Excellent |
| Debt / Equity | 31.5% | Moderate |
| Current Ratio | 1.39 | Adequate |
Overall: Balance sheet is strong with conservative leverage.
Industry: Software - Infrastructure | Data: TTM (Trailing 12 Months) as of 2026-02-06 | Source: Yahoo Finance
| Company | Market Cap | P/E | Forward P/E | EV/EBITDA | Profit Margin |
|---|---|---|---|---|---|
| MSFT (Target) | $2981.4B | 25.1x | 21.3x | 16.9x | 39.0% |
| ORCL | $410.5B | 26.8x | 18.1x | 19.2x | 25.3% |
| PLTR | $323.9B | 219.2x | 75.3x | 210.7x | 36.3% |
| CRM | $182.2B | 25.6x | 14.6x | 15.1x | 17.9% |
| NOW | $106.3B | 60.3x | 20.1x | 37.8x | 13.2% |
| SNOW | $57.6B | 0.0x | 103.7x | -42.9x | -30.8% |
| Peer Average (excl. target) | - | 26.8x | 18.1x | 19.2x | 21.6% |
| Method | Inputs | Fair Value |
|---|---|---|
| Equity (TTM EPS) | EPS: $18.87 x 32.5x P/E | $613.32 |
| Equity (Forward EPS) | EPS: $18.87 x 32.5x P/E | $613.32 |
| EV-Based (EBITDA) | EBITDA: $280.06B x 23.2x | $870.45 |
| Headline Fair Value | Median value used (spread 36.8% exceeds 15% threshold) | $613.32 |
Assessment: Strong positive profile with multiple favorable factors.
MSFT trades at 21.3x TTM P/E and 21.3x Forward P/E. This compares to peer averages of 26.8x TTM and 18.1x Forward P/E.
The company generates positive levered free cash flow of $53.64B, demonstrating its ability to generate real cash after all obligations.
53 analysts cover this stock with a consensus strong_buy rating. Price targets range from $392 to $730, with a mean of $600.
17.76 - Neutral/Low Fear
Score: 45/100
140.31
SPY YTD: 16.3% | RSP YTD: 14.2%
Tracking 3 customers, 3 suppliers | Did they beat or miss? What does it mean for MSFT?
| Company | What They Buy | Last Quarter | Revenue QoQ | 6-Mo Stock |
|---|---|---|---|---|
| Walmart Inc. | Azure cloud services |
BEAT +29%
2025-11-20
|
1.2% | 27.8% |
| The Coca-Cola Company | Azure AI/cloud services |
BEAT +5%
2025-10-21
|
-0.6% | 13.9% |
| Salesforce, Inc. | Azure infrastructure |
BEAT +14%
2025-12-03
|
0.2% | -20.3% |
| Company | What They Supply | Last Quarter | Revenue QoQ | 6-Mo Stock |
|---|---|---|---|---|
| Intel Corporation | Server processors |
MISS -28%
2026-01-22
|
0.2% | 155.9% |
| Advanced Micro Devices, Inc. | Server CPUs/GPUs |
BEAT +16%
2026-02-03
|
11.1% | 20.9% |
| NVIDIA Corporation | AI accelerators |
BEAT +3%
2025-11-19
|
22.0% | 2.6% |
Track Record: 8 beats, 0 misses, 0 in-line out of 8 quarters | 100% Beat Rate
| Date | EPS Estimate | EPS Actual | Result | Surprise % |
|---|---|---|---|---|
| 2026-01-28 | $3.92 | $4.14 | BEAT | 5.7% |
| 2025-10-29 | $3.66 | $3.72 | BEAT | 1.6% |
| 2025-07-30 | $3.38 | $3.65 | BEAT | 8.1% |
| 2025-04-30 | $3.22 | $3.46 | BEAT | 7.4% |
| 2025-01-29 | $3.12 | $3.23 | BEAT | 3.5% |
| 2024-10-30 | $3.11 | $3.30 | BEAT | 6.2% |
| 2024-07-30 | $2.93 | $2.95 | BEAT | 0.5% |
| 2024-04-25 | $2.84 | $2.94 | BEAT | 3.4% |
All financial data sourced from:
Click any colored number or source label throughout the report to view its source.
This analysis is generated automatically using publicly available data and should not be considered as financial advice. All figures are sourced from Yahoo Finance and SEC EDGAR and may contain inaccuracies. Always verify data with primary sources (SEC filings, company IR) before making investment decisions.
Past performance does not guarantee future results. Investing involves risk, including the possible loss of principal.
Current: Next 12 Months (NTM) | Data Source: SEC EDGAR
Levered FCF is cash that can't be faked. Unlike earnings which can be manipulated through accounting (depreciation schedules, revenue recognition, etc.), cash flow is simple: the money is either in the bank or it's not.
This metric shows how much actual cash the company generates after paying for:
A company with strong Levered FCF can pay dividends, buy back shares, pay down debt, or invest in growth - all from real cash, not accounting profits.
Customers and suppliers report earnings BEFORE the company you're analyzing. Their results give you early signals about demand and supply chain health.
Customer Example: If Microsoft (AMD customer) beats revenue estimates by 20%, it likely means they bought more chips than analysts expected. This is bullish for AMD's upcoming earnings.
Supplier Example: If TSMC (AMD supplier) reports strong demand from AMD, that confirms AMD's production is ramping up.
By the time AMD reports, you already have data points from 5+ related companies. Smart analysts piece these together to predict earnings before they're announced.
Not all revenue is equal. Different business segments have different growth rates and profit margins.
For example, AMD's Data Center segment has ~40% margins while Gaming might be ~15%. A shift toward Data Center means higher overall profitability even if total revenue stays flat.
Watch for: