QualityDipJC
Jim CramerOct 29 · TV
bullishSays Microsoft's strong earnings and restrained AI spending make it a buy.
Stocks / Technology · Software
MSFT
Microsoft MSFT
$521.91−1.55% dayFri Oct 30 close
Not in a dip by our rules: 4% below its 52-week high.
A quality company. No fair value estimate for now: a capital-spending surge is squeezing its free cash flow.
- Fair value est.
- n/a
- Market Value
- forming
- Off 52-wk high
- −4%
- Risk vs market
- Market-likebeta 1.01
5 bullish · 4 bearish See why
Drag across the chart to see any day
Key levels
Every level vs today’s $521.91
- 52-wk lowlowest close, 1 year$352.83−32.4%
- PriceFri Oct 30 close$521.91you are here
- 52-wk highhighest close, 1 year$543.45+4.1%
Fair value estimate
Estimate unreliable for MSFT: free cash flow is squeezed by a capital-spending surge (capex is 69% of operating cash flow over the last 12 months, vs 32% in FY2023), so a DCF on today's free cash flow would understate the business. We’d rather show nothing than a made-up number.
Risk vs market
How risk vs market is measured
One year of daily returns (Oct 30 to Oct 30, 252 sessions). Beta = how much MSFT moved for each 1% move in the S&P 500 (SPY); 1.0 moves with the market. Volatility is the yearly standard deviation of daily returns. Past behavior, not a forecast.
Market-like
Moves about in line with the market, and its own price swings are 2.6× the S&P 500’s.
- Beta vs S&P 500
- 1.01
- Volatility
- 33% vs 13% SPY
- Correlation SPY
- 0.39
- Correlation QQQ
- 0.34
Bull vs bear
Rule-based from the data on this page, strongest first. Not advice.
Top bullish points 5 of 5
ProfitabilityReturn on equity of 34% over the last 12 months.
GrowthDiluted EPS grew 32% to $17.95 in FY2026.
ProfitabilityReturn on invested capital of 30%, above the 9.5% discount rate our DCF uses.
GrowthSales compounded 16% a year from FY2023 to FY2026.
QualityPasses all four of our quality checks: cash generation, returns on capital, growth and balance sheet.
Top bearish points 4 of 5
Cash returnsFree cash flow fell 23% over the last 12 months vs the 12 months before.
ValuationPrice / free cash flow of 65×: a rich price for the cash it generates today.
Cash returnsDividend yield of 0.7%, below the 0.9% median for the 69 Technology companies we cover.
VoicesDavid Tepper (Aug 14): “13F: sold entire stake, Q2 2026 (had 90,000 shares). Quarterly filing, positions as of 2026-06-30.” SEC 13F (Appaloosa)
Who’s talking about it
Notable investors, executives, analysts and public figures on Microsoft in the last 48 hours. Headlines as published, each linked. Their words, not ours.
Satya NadellaChairman & CEO, MicrosoftCompany
Microsoft CEO Satya Nadella says that when Dario Amodei, Ilya Sutskever, Sam Altman, Greg Brockman and ElThe Times of India ·
Checked Nov 1, 9:09 PM ET. Matched by name against a maintained list plus the company’s own executives. Information only, not advice.
Compare with peers
Closest in size in Software
CompanyPrice1 yearvs fair valueP/EMkt cap
PLTRPalantir Technologies$184.11−6.3%−5%−78%156.8×$472BORCLOracle$130.67−6.4%−49%n/a22.5×$422BSAPSAP SE ADS$235.02+0.4%−9%−30%34.3×$288BCRWDCrowdStrike$250.43−4.1%+86%−81%n/a$267BSHOPShopify$157.49−5.6%−9%−65%106.0×$216BCRMSalesforce$229.17−0.7%−11%+87%19.5×$190BAll fundamentals
P/E 27.2 · FCF yield 1.5% · ROE 34%
Valuation
- P/E
- 27.2×3-yr-end avg 31.7× · Technology median 33.9×
- Price / FCF
- 64.8×
- FCF yield
- 1.5%
- EV / EBITDA
- 18.8×
- Price / sales
- 11.22×
- Price / book
- 8.26×
- Market cap
- $3.89Tprice × diluted shares
- Enterprise value
- $3.86T
Growth
- Revenue, 12 months
- $346B
- Sales growth, 12 months
- +17.9%vs the 12 months before
- Sales growth, 3 yrs
- +16.1%/yrfrom FY2023
- Diluted EPS, 12 months
- $19.15
- EPS growth, last FY
- +31.6%
- Net income, 12 months
- $143B
- Net income growth
- +36%12 months vs before
Profitability
- Gross margin
- 67.7%
- Operating margin
- 47.1%
- Net margin
- 41.2%
- FCF margin
- 17.3%
- Return on equity
- 34%
- Return on invested capital
- 30%
Balance sheet
- Cash & short-term inv.
- $64.5B
- Total debt
- $35.5B
- Net cash
- $29.0B
- Debt / equity
- 0.08×
- Interest coverage
- 50.6×operating income / interest
Cash flow & returns
- Free cash flow, 12 months
- $60.0B
- FCF growth, 12 months
- −23%
- Dividend yield
- 0.70%$27.0B paid
- Payout ratio
- 19%
- Buybacks, 12 months
- $21.0B0.5% of market cap
- Share count, 1 year
- −0.3%diluted shares vs a year ago
- Stock-based comp
- $12.6B
Trailing 12 months to Sep 30, 2026; balance sheet at Sep 30, 2026. From Microsoft’s SEC filings. Sparklines show up to six fiscal years. n/a means we don’t hold that number, with the reason. How each is computed.
Valuation details
MV $526.23
Market ValueAverage paid since the Oct 28 filing, 2 trading days; fresh, still pricing in
$526.23price −1%
Fair value estimaten/a — free cash flow is squeezed by a capital-spending surge (capex is 69% of operating cash flow over the last 12 months, vs 32% in FY2023), so a DCF on today's free cash flow would understate the business
n/a
FCF valuen/a — capital spending is squeezing trailing free cash flow (see above)
n/a
How we got these
- Market Value: volume-weighted average close from Oct 29 (first full trading day after the filing) to Oct 30, 2 trading days. Simple average $526.02. Event: SEC 8-K Item 2.02 (earnings), filed Oct 28, 4:04 PM ET. Read the filing.
- Free cash flow, 12 months to Sep 30: $195.9B operating cash flow − $135.9B capex = $60.0B, or $8.05 a share on 7.45B diluted shares.
- DCF: free cash flow per share grows 15% a year for five years, from its FY2023–FY2026 revenue growth of 16% a year (capped at 15%), fading to 3% by year ten; 9.5% discount rate, 3% terminal growth.
- FCF value: free cash flow per share ÷ 4%, the price at which the stock yields 4% in free cash flow.
Setup & signals
No setup armed
No setup armed, so there’s no trigger or stop to track yet. Reversal signal rules only arm once a company is in a dip.
Momentum & 52-week range
RSI 49 · 5 days −0.5%
$521.91nowMV
52-wk low $352.83high $543.45
Off 52-wk high−4.0%
5 days−0.5%
vs 50-day avg+1.8%
vs 200-day avg+19.2%
RSI (14)49
Market cap$3.94T
The business
FCF $60.0B · Sales +19%
- Free cash flow, 12 months$60.0B
- Free-cash-flow yield1.5%
- Free-cash-flow margin17%
- Gross margin68%
- Operating margin47%
- Return on invested capital26%
- Return on equity34%
- Sales growth (latest quarter vs year-ago quarter)+19%
- Net debt / EBITDA0.2×
Investor buzz
3 from investors
Their view, not ours, and not advice. All buzz
DI
Dan IvesOct 7 · Research note
bullishNamed Microsoft among his top 5 tech picks into 2027 (with Nvidia, Palantir, Apple, CrowdStrike).
DT
David TepperAug 14 · 13F filing
bearish13F: sold entire stake, Q2 2026 (had 90,000 shares). Quarterly filing, positions as of 2026-06-30.
Information only, not investment advice. Fair value estimates and talking points are rule-based model output from public data and can be wrong; stop levels are reference points, not orders. How every number is computed.
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