As of August 3, 2026, Microsoft Corp's estimated intrinsic value ranges from $123.33 to $629.03 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $622.76 | +34.0% |
| Discounted Cash Flow (5Y) | $509.00 | +9.5% |
| Dividend Discount Model (Multi-Stage) | $481.99 | +3.7% |
| Dividend Discount Model (Stable) | $629.03 | +35.4% |
| Earnings Power Value | $123.33 | -73.5% |
Is Microsoft Corp (MSFT) undervalued or overvalued?
With the current market price at $464.72, the stock appears to be moderately undervalued.
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 | 0.58 | 0.84 |
| Cost of equity | 6.5% | 9.6% |
| 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% | 9.4% |
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 | $509 | $3,867,043M | 83.2% |
| 10-Year Growth | $623 | $4,712,060M | 71.3% |
| 5-Year EBITDA | $718 | $5,417,623M | 88.0% |
| 10-Year EBITDA | $833 | $6,272,393M | 78.4% |
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) | 9.4% - 6.4% |
| Enterprise Value | $813,611M - $1,190,585M |
| Net Debt | $85,953M |
| Equity Value | $727,658M - $1,104,632M |
| Outstanding Shares | 7,428M |
| Fair Value | $98 - $149 |
| Selected Fair Value | $123.33 |
| Metric | Value |
|---|---|
| Market Capitalization | $3452140M |
| Enterprise Value | $3538093M |
| Trailing P/E | 25.81 |
| Forward P/E | 23.53 |
| Trailing EV/EBITDA | 21.35 |
| Current Dividend Yield | 76.60% |
| 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% | $186.83 |
| Discounted Cash Flow (5Y) | 25% | $127.25 |
| Dividend Discount Model (Multi-Stage) | 20% | $96.40 |
| Dividend Discount Model (Stable) | 15% | $94.35 |
| Earnings Power Value | 10% | $12.33 |
| Weighted Average | 100% | $517.16 |
Based on our comprehensive valuation analysis, Microsoft Corp's intrinsic value is $517.16, which is approximately 11.3% above the current market price of $464.72.
Key investment considerations:
Given these factors, we believe Microsoft Corp is currently moderately undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.