Microsoft (MSFT) Stock After Recent Slide Is The Current Valuation An Opportunity?

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Microsoft (MSFT) Stock After Recent Slide Is The Current Valuation An Opportunity? Bailey Pemberton Fri, June 26, 2026 at 2:10 PM EDT 5 min read MSFT Make better investment decisions with Simply Wall St's easy, visual tools that give you a competitive edge. Recent months have given investors plenty of reasons to recheck what they think Microsoft is worth, especially if you are asking whether the current share price lines up with the company's underlying fundamentals. Microsoft's share price closed at US$352.83, with the stock down 7.0% over the past week, 15.2% over the past month, and 25.4% year to date, while still showing gains over the last 3 and 5 years at 7.8% and 35.4% respectively. Alongside market wide sentiment, recent headlines around Microsoft have continued to focus on its role as a major software provider and its position in broader technology themes. This helps frame how investors are rethinking risk and opportunity around the stock. Even without specific short term catalysts, this mix of past long term gains and recent declines has put valuation back at the center of the conversation. On Simply Wall St's valuation checks, Microsoft scores a 6 out of 6 for being assessed as undervalued across all six metrics. This sets up a closer look at traditional valuation tools like P/E and discounted cash flow, and then, later in the article, a more complete way to think about what that fair value really means. Find out why Microsoft's -28.5% return over the last year is lagging behind its peers. A Discounted Cash Flow, or DCF, model looks at the cash Microsoft is expected to generate in the future and then discounts those projected cash flows back to today to estimate what the business might be worth right now. For Microsoft, Simply Wall St uses a 2 Stage Free Cash Flow to Equity model built on cash flow projections. The latest twelve month free cash flow is about $93.7b. Analyst inputs and extrapolated estimates point to projected free cash flow of $181.1b in 2030, with intermediate annual projections between 2026 and 2035 used to shape the curve of expectations. Bringing all those future cash flows back to today, the model arrives at an estimated intrinsic value of $562.71 per share, expressed in $. Compared with the recent share price of $352.83, the model suggests Microsoft trades at a 37.3% discount to this DCF estimate, which indicates the stock screens as undervalued on this approach. Our Discounted Cash Flow (DCF) analysis suggests Microsoft is undervalued by 37.3%. Track this in your watchlist or portfolio , or discover 43 more high quality undervalued stocks . Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Microsoft. For profitable companies like Microsoft, the P/E ratio is a common way to check how much you are paying for each dollar of earnings. It helps you compare the stock with other companies and with your own expectations for what feels reasonable. What counts as a fair P/E usually reflects two main things: how quickly earnings are expected to grow and how much risk investors see in those earnings. Higher expected growth and lower perceived risk can justify a higher P/E, while slower growth or higher risk often points to a lower one. Microsoft currently trades on a P/E of 20.93x. That sits below the Software industry average of 25.67x and also below the peer group average of 26.13x. Simply Wall St's Fair Ratio is 45.02x, which is a proprietary estimate of what P/E might be appropriate given factors like Microsoft's earnings profile, margins, industry, market cap and risk characteristics. Because it is tailored to the company, the Fair Ratio can be more informative than a simple comparison with peers or the wider industry. Comparing the current P/E of 20.93x with the Fair Ratio of 45.02x, the stock screens as undervalued on this metric. P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies . Earlier it was mentioned that there is an even better way to understand valuation. Here is Microsoft Narratives, where you link your own story about the company to a financial forecast and a fair value, instead of relying only on static ratios like P/E. A Narrative on Simply Wall St is your view of Microsoft written into the numbers, combining your assumptions about fair value, future revenue, earnings and margins with a short explanation of why you think the business looks that way. Each Narrative ties Microsoft's business story to a full forecast and then to a fair value estimate. These Narratives live inside the Community page on Simply Wall St, where millions of investors share their perspectives in an accessible, point and click format. Once you have a Narrative, the platform continuously compares its Fair Value to the live share price. You can use that gap to help decide whether the stock looks expensive or cheap for your own purposes, without this being a buy or sell signal. Narratives update automatically when new data such as earnings, news or analyst estimates change, so your Microsoft view keeps evolving rather than becoming stale. For example, one Community Narrative currently anchors on a fair value around US$360 per share, another sits closer to US$550, and others range from roughly US$330 up to about US$650. This shows how different investors can look at the same Microsoft data and reach very different, but clearly explained, valuation stories. Do you think there's more to the story for Microsoft? Head over to our Community to see what others are saying! This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include MSFT . Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

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Microsoft's share price has recently shown adjustments of -7.0% weekly, -15.2% monthly, and -25.4% year-to-date, but Simply Wall St's DCF and valuation metrics indicate an undervaluation of about 37.3% — intrinsic value $562.71 versus current price $352.83. A P/E of 20.93x is below the software sector average, presenting an attractive signal from a traditional value perspective. However, the DCF's growth depends on AI and cloud monetization assumptions and corporate execution, and there is additional downside risk if interest rates or market sentiment deteriorate. Investors are likely to reprice the stock based on whether the valuation gap is closed by confirmation of earnings and strategy execution.

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