MSFT
Microsoft CorporationTechnology·Software - Infrastructure
Current Price
$401.70
Market Cap
$2.99T
Net Debt
-$51.4B
Shares Outstanding
7.43B
Financial Statements
| Metric | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | TTM (Q2 FY2026) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $62.5B | $69.9B | $73.7B | $77.8B | $86.8B | $93.6B | $85.3B | $90.0B | $110.4B | $125.8B | $143.0B | $168.1B | $198.3B | $211.9B | $245.1B | $281.7B | $298.4B |
| Revenue Growth | — | 11.9% | 5.4% | 5.6% | 11.5% | 7.8% | -8.8% | 5.4% | 22.7% | 14.0% | 13.6% | 17.5% | 18.0% | 6.9% | 15.7% | 14.9% | 14.4% |
| Operating Income | $24.1B | $27.2B | $21.8B | $26.8B | $27.8B | $18.2B | $20.2B | $22.3B | $35.1B | $43.0B | $53.0B | $69.9B | $83.4B | $88.5B | $109.4B | $128.5B | $136.8B |
| Operating Margin | 38.6% | 38.8% | 29.5% | 34.4% | 32.0% | 19.4% | 23.7% | 24.8% | 31.8% | 34.1% | 37.0% | 41.6% | 42.1% | 41.8% | 44.6% | 45.6% | 45.8% |
| Net Income | $18.8B | $23.1B | $17.0B | $21.9B | $22.1B | $12.2B | $16.8B | $21.2B | $16.6B | $39.2B | $44.3B | $61.3B | $72.7B | $72.4B | $88.1B | $101.8B | $106.4B |
| Net Margin | 30.0% | 33.1% | 23.0% | 28.1% | 25.4% | 13.0% | 19.7% | 23.6% | 15.0% | 31.2% | 31.0% | 36.5% | 36.7% | 34.1% | 36.0% | 36.1% | 35.7% |
| EPS (Diluted) | $2.10 | $2.69 | $2.00 | $2.58 | $2.63 | $1.48 | $2.10 | $2.71 | $2.13 | $5.06 | $5.76 | $8.05 | $9.65 | $9.68 | $11.80 | $13.64 | $14.25 |
| Free Cash Flow | $22.1B | $24.6B | $29.3B | $24.6B | $26.7B | $23.1B | $25.0B | $31.4B | $32.3B | $38.3B | $45.2B | $56.1B | $65.1B | $59.5B | $74.1B | $71.6B | $67.6B |
| FCF Margin | 35.4% | 35.2% | 39.8% | 31.6% | 30.8% | 24.7% | 29.3% | 34.9% | 29.2% | 30.4% | 31.6% | 33.4% | 32.9% | 28.1% | 30.2% | 25.4% | 22.6% |
Historical Cash Flows
Historical Cash Flows
| ($M) | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $62.5B | $69.9B | $73.7B | $77.8B | $86.8B | $93.6B | $85.3B | $90.0B | $110.4B | $125.8B | $143.0B | $168.1B | $198.3B | $211.9B | $245.1B | $281.7B |
| Growth | — | 11.9% | 5.4% | 5.6% | 11.5% | 7.8% | -8.8% | 5.4% | 22.7% | 14.0% | 13.6% | 17.5% | 18.0% | 6.9% | 15.7% | 14.9% |
| EBIT | $24.1B | $27.2B | $21.8B | $26.8B | $27.8B | $18.2B | $20.2B | $22.3B | $35.1B | $43.0B | $53.0B | $69.9B | $83.4B | $88.5B | $109.4B | $128.5B |
| EBIT Margin | 38.6% | 38.8% | 29.5% | 34.4% | 32.0% | 19.4% | 23.7% | 24.8% | 31.8% | 34.1% | 37.0% | 41.6% | 42.1% | 41.8% | 44.6% | 45.6% |
| NOPAT | $17.8B | $22.2B | $16.5B | $21.6B | $22.0B | $11.8B | $17.2B | $20.4B | $17.5B | $38.5B | $44.2B | $60.1B | $72.4B | $71.6B | $89.8B | $106.7B |
| D&A | $1.8B | $2.0B | $2.2B | $2.6B | $3.4B | $4.1B | $4.9B | $6.1B | $7.7B | $9.7B | $10.7B | $9.3B | $12.6B | $11.0B | $15.2B | $22.0B |
| CapEx | $2.0B | $2.4B | $2.3B | $4.3B | $5.5B | $5.9B | $8.3B | $8.1B | $11.6B | $13.9B | $15.4B | $20.6B | $23.9B | $28.1B | $44.5B | $64.6B |
| ΔNWC | $0 | $16.6B | $6.3B | $11.7B | $4.6B | $6.2B | $5.4B | $15.0B | $15.8B | -$5.0B | $3.5B | -$13.9B | -$21.1B | $5.5B | -$45.7B | $15.5B |
| Unlevered FCF | $17.7B | $5.3B | $10.1B | $8.3B | $15.4B | $3.8B | $8.3B | $3.3B | -$2.3B | $39.3B | $36.0B | $62.6B | $82.3B | $49.0B | $106.2B | $48.7B |
DCF Valuation
Adjust the assumptions below to derive your own intrinsic value. All calculations update in real-time.
Perpetuity Growth
$317.24
vs $401.70-21.0%
Exit Multiple
$543.31
vs $401.70+35.3%
Projected Cash Flows
| ($M) | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|
| Revenue | $333.3B | $382.9B | $428.9B | $471.8B | $509.5B |
| Revenue % Chg. | % | % | % | % | % |
| EBIT | $153.3B | $178.1B | $201.6B | $221.7B | $239.5B |
| EBIT Margin | % | % | % | % | % |
| Tax Rate | % | % | % | % | % |
| NOPAT | $124.9B | $145.1B | $164.3B | $180.7B | $195.2B |
| NOPAT Margin | 37.5% | 37.9% | 38.3% | 38.3% | 38.3% |
| D&A | $46.7B | $53.6B | $55.8B | $56.6B | $61.1B |
| D&A / Revenue | % | % | % | % | % |
| CapEx | $83.3B | $84.2B | $85.8B | $84.9B | $81.5B |
| CapEx / Revenue | % | % | % | % | % |
| Chg. NWC | $6.7B | $7.7B | $8.6B | $9.4B | $10.2B |
| NWC / Revenue | % | % | % | % | % |
| Unlevered FCF | $81.6B | $106.8B | $125.7B | $143.0B | $164.6B |
| PV of UFCF | $74.9B | $89.9B | $97.1B | $101.3B | $107.0B |
| Σ PV of UFCF | $74.9B | $164.8B | $261.9B | $363.1B | $470.1B |
%
%
x
Valuation Waterfall
Perpetuity Method
PV of FCFs$470.1B
PV of Terminal Value$1.84T
Enterprise Value$2.31T
Less: Net Debt$51.4B
Equity Value$2.36T
Exit Multiple Method (EV/EBITDA)
PV of FCFs$470.1B
PV of Terminal Value$3.52T
Enterprise Value$3.99T
Less: Net Debt$51.4B
Equity Value$4.04T
Sensitivity Analysis
WACC vs Terminal Growth (Perpetuity)
| WACC \ Terminal Growth | 2.0% | 2.5% | 3.0% | 3.5% | 4.0% |
|---|---|---|---|---|---|
| 7.0% | $396.09 | $433.63 | $480.56 | $540.90 | $621.34 |
| 8.0% | $328.25 | $352.91 | $382.51 | $418.68 | $463.89 |
| 9.0% | $279.88 | $297.12 | $317.24 | $341.00 | $369.53 |
| 10.0% | $243.68 | $256.29 | $270.69 | $287.31 | $306.70 |
| 11.0% | $215.59 | $225.13 | $235.85 | $248.01 | $261.90 |
WACC vs Exit Multiple
| WACC \ Exit Multiple (EV/EBITDA) | 12x | 15x | 18x | 21x | 24x |
|---|---|---|---|---|---|
| 7.0% | $420.03 | $506.54 | $593.04 | $679.55 | $766.06 |
| 8.0% | $402.34 | $484.92 | $567.49 | $650.07 | $732.65 |
| 9.0% | $385.59 | $464.45 | $543.31 | $622.16 | $701.02 |
| 10.0% | $369.72 | $445.05 | $520.39 | $595.73 | $671.07 |
| 11.0% | $354.67 | $426.67 | $498.68 | $570.68 | $642.68 |
Investment Thesis
Microsoft is the dominant enterprise software and cloud infrastructure platform, with Azure benefiting from AI workload migration. Operating margins continue expanding (42% → 46%) despite massive CapEx investment. Net cash position of $49B provides financial strength.
Bull Case
- +Azure growth accelerating from AI workload migration (+30% YoY)
- +Operating margins expanding toward 48-49% with scale leverage
- +Copilot monetization across Office 365, GitHub, Dynamics
- +CapEx normalizes from peak FY2026-27, unlocking FCF growth
- +AAA credit rating with $49B net cash position
Bear Case
- -Massive CapEx ($83B+ annually) may not generate adequate returns
- -Azure competition from AWS and GCP intensifying
- -AI investment cycle may compress margins before payoff
- -Regulatory scrutiny on market dominance and OpenAI partnership
- -Cyclical PC market weakness impacting More Personal Computing segment
Key Catalysts
- →Azure growth trajectory and AI revenue contribution
- →CapEx normalization timeline (expected FY2028+)
- →Copilot adoption rates and ARPU expansion
- →Q3 FY2026 earnings (Jan-Mar 2026 quarter)
- →OpenAI partnership evolution and competitive dynamics
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Disclaimer: This is not investment advice. All projections are estimates based on publicly available data. Past performance does not guarantee future results. Always do your own research before making investment decisions. Last updated: 2026-01-29.