As of October 6, 2026, Microsoft Corp's estimated intrinsic value ranges from $120.40 to $630.64 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $577.58 | +10.0% |
| Discounted Cash Flow (5Y) | $472.89 | -10.0% |
| Dividend Discount Model (Multi-Stage) | $445.04 | -15.3% |
| Dividend Discount Model (Stable) | $630.64 | +20.1% |
| Earnings Power Value | $120.40 | -77.1% |
Is Microsoft Corp (MSFT) undervalued or overvalued?
With the current market price at $525.18, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Microsoft Corp's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.57 | 0.96 |
| Cost of equity | 6.5% | 10.2% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 18.0% | 18.5% |
| Debt/Equity ratio | 0.03 | 0.03 |
| After-tax WACC | 6.4% | 10.0% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $473 | $3,597,395M | 82.1% |
| 10-Year Growth | $578 | $4,374,788M | 69.5% |
| 5-Year EBITDA | $761 | $5,734,120M | 88.8% |
| 10-Year EBITDA | $866 | $6,513,634M | 79.5% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $76,651M |
| Discount Rate (WACC) | 10.0% - 6.4% |
| Enterprise Value | $763,120M - $1,196,893M |
| Net Debt | $85,953M |
| Equity Value | $677,167M - $1,110,940M |
| Outstanding Shares | 7,426M |
| Fair Value | $91 - $150 |
| Selected Fair Value | $120.40 |
| Metric | Value |
|---|---|
| Market Capitalization | $3899750M |
| Enterprise Value | $3985703M |
| Trailing P/E | 29.16 |
| Forward P/E | 26.58 |
| Trailing EV/EBITDA | 23.10 |
| Current Dividend Yield | 69.35% |
| Dividend Growth Rate (5Y) | 9.89% |
| Debt-to-Equity Ratio | 0.03 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $173.27 |
| Discounted Cash Flow (5Y) | 25% | $118.22 |
| Dividend Discount Model (Multi-Stage) | 20% | $89.01 |
| Dividend Discount Model (Stable) | 15% | $94.60 |
| Earnings Power Value | 10% | $12.04 |
| Weighted Average | 100% | $487.14 |
Based on our comprehensive valuation analysis, Microsoft Corp's intrinsic value is $487.14, which is approximately 7.2% below the current market price of $525.18.
Key investment considerations:
Given these factors, we believe Microsoft Corp is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.