Stock reports › US › Technology

Microsoft Corporation (MSFT) stock analysis

Microsoft reports after the close on Oct 28 with the stock 4.04% below its 52-week high

Microsoft (MSFT) closed at 531.33 on Oct 27, 2026, up 36.05% over three months but only 1.47% over one year. Earnings are due after the close on Oct 28, with an implied move of 4.90% against a recent average actual move of 8.12% over the last four quarters. Revenue growth of 17.79% and a 46.78% operating margin sit alongside free cash flow that fell 6.46% as capex rose.

  • Price: 531.33
  • Market Cap (USD): $3.95T
  • P/E: 29.51×
  • Fwd P/E: 26.91×
  • Div Yield: 0.69%
  • 1Y Return: 1.47%
  • Next Earnings: Oct 28, 2026
  • Mean Target: 592.72
  • Rating: Strong Buy

Bull case

  • Revenue grew 17.79% year over year to $331.84B, and quarterly revenue has risen for 9 straight quarters, reaching 90.01B in Q4 FY2026 (quarter ended Jun 30, 2026).
  • Operating margin is 46.78% (94th percentile of US Technology, sector median 16.49%) and ROIC is 24.81%, above the sector median of 15.21%.
  • The company has beaten EPS estimates 16 times in a row; the last report (Jul 29, 2026) showed an EPS surprise of 11.79% and a 14.68% price move. Analysts' mean target is 592.72 versus the 531.33 price.

Bear case

  • Free cash flow was $66.99B, down 6.46% year over year, because capex of 115.95B absorbed much of the 182.94B operating cash flow; FCF yield is 1.70%, in the 30th percentile of the sector.
  • Forward P/E is 26.91 on next year's consensus EPS basis, in the 68th percentile and above the industry median of 19.31; the PEG ratio is 1.40.
  • Insiders made 19 sales and no purchases over 90 days, with net value of -75.4M, and the stock gained only 1.47% over the past year with a maximum drawdown of -34.91%.

What to watch

  • Earnings after the close on Oct 28, 2026 (EPS consensus 4.72; implied move 4.90%).
  • Ex-dividend date Nov 19, 2026 for a 0.98 quarterly dividend, payable Dec 10, 2026.
  • 52-week high of 553.72 and all-time high of 555.45; 20-day high of 551.15.
  • The 20-day average at 528.99 and 50-day average at 510.19 as nearby support references.

General

Microsoft develops operating systems, server and business applications, developer tools, devices and games. Growth and margins are strong, and the shares have rebounded well above their 200-day average. Valuation is above the sector median, and heavy capex is weighing on free cash flow ahead of earnings.

Business and momentum

Revenue was $331.84B over the trailing twelve months, with EPS of 17.95, up 31.60% year over year. Server products and cloud services contribute 39.00% of revenue and Microsoft 365 Commercial 30.74%. The stock returned 36.05% over three months but 1.47% over one year.

Valuation in context

Trailing P/E is 29.51, in the 41st percentile of US Technology, versus a sector median of 34.04. Forward P/E of 26.91 (next year's consensus EPS basis) is in the 68th percentile, versus a median of 21.60. Price-to-sales is 11.90.

Analysts and market signals

As of Oct 28, 2026, 68 ratings are Buy, 15 Hold and none Sell. The mean target is 592.72 from 31 analysts. In the last 30 days there were 4 upgrades and 5 downgrades. Short interest is low at 0.88% of float (Oct 15, 2026).

Main risks

Capex of 115.95B exceeds half of operating cash flow, and free cash flow is down 6.46%. Earnings on Oct 28 could move the shares sharply: the last four quarterly moves averaged 8.12% in absolute terms, and 2 of the last 4 were declines.

Long-term investor

Microsoft shows durable growth, very high margins and a strong balance sheet. The 3-year revenue CAGR is 16.12% and EPS CAGR 22.86%. The open questions are the return on heavy capex and a valuation above peers.

Growth durability

Annual revenue rose from $168.09B in fiscal 2021 to $331.84B in fiscal 2026. The 5-year revenue CAGR is 14.57%. Quarterly revenue rose from 77.67B to 90.01B between Q1 and Q4 FY2026. Next-year EPS growth is expected at 19.17%, with FY2 consensus EPS of 23.53.

Returns and balance sheet

ROIC is 24.81% and ROE 34.04%, above sector medians of 15.21% and 17.58%. Net margin is 40.31%. Debt-to-equity is 0.29 and net debt to EBITDA 0.24, with interest coverage of 50.88. Free cash flow fell from $71.61B in fiscal 2025 to $66.99B in fiscal 2026.

Capital returns

In fiscal 2026 the company paid 26.45B in dividends and repurchased 22.27B of stock; diluted shares were 7.45B versus 7.46B a year earlier. The dividend yield is 0.69% with 20 years of growth and a 20.28% payout ratio. The next quarterly dividend is 0.98, up from 0.91.

Valuation and ownership

Forward P/E of 26.91 sits against an industry median of 19.31. Institutions hold 74.66%, up 2.74% over three months. Insiders had 19 sells and no buys in 90 days, including CEO Satya Nadella sales on Sep 1, 2026 and tax withholding on Aug 31.

Swing trader

The trend is positive: the price is above its 20-, 50- and 200-day averages, and a golden cross occurred on Aug 31, 2026. Short-term momentum has cooled, with the MACD below its signal line. Earnings on Oct 28 after the close dominate the near-term risk.

Trend and momentum

Price of 531.33 is 0.44% above the 20-day average (528.99), 4.14% above the 50-day (510.19) and 21.57% above the 200-day (437.05). RSI is 56.31 and ADX 26.19. MACD of 6.63 is below its signal of 8.49, a negative histogram of -1.86.

Levels and recent action

The 20-day range runs from 510.31 to 551.15, and the 52-week high is 553.72. Bollinger bands span 512.38 to 545.60. The past 15 sessions have mostly traded between roughly 521 and 543 closes. Volume of 19.4M on Oct 27 was 0.91 times average.

Volatility and risk

ATR is 10.95, or 2.06% of price. 30-day historical volatility is 21.20%. The relative strength rating is 89 and three-month return is 36.05%, but one-year relative strength is -12.23%.

Catalysts and flow

Earnings come after the close on Oct 28; the last move was 14.68% on Jul 29. Ex-dividend is Nov 19. Recent analyst actions were mostly reiterations, with Raymond James, Wells Fargo and Scotiabank reiterating on Oct 26-27. Short interest was 65.7M shares on Oct 15, up 7.43%.

Options

Implied volatility is elevated relative to realized volatility, and the term structure is in backwardation ahead of earnings. The market implies a 4.90% earnings move, below the recent average of actual moves. Liquidity is strong.

Volatility level

30-day implied volatility is 31.99%, with an IV rank of 47 and IV percentile of 71 against a 52-week range of 18.55% to 47.26%. It is above 30-day historical volatility of 21.20%, a ratio of 1.51 times, and the volatility risk premium is +12.3 points.

Term structure and skew

30-day IV exceeds 90-day IV (29.65%), a slope of -2.3 points, so the term structure is in backwardation, consistent with the earnings event inside the 30-day window. The 25-delta skew is +3.0 points.

Expected moves

The 7-day expected move is 23.54 (4.43%) and the 30-day expected move is 48.73 (9.17%). The implied earnings move of 4.90% compares with an 8-quarter average of 7.21%, a median of 6.56% and a maximum of 14.68%. Average IV crush is 25.60%.

Premium yields and liquidity

The 30-day expiry is Nov 27, 2026 (31 days), and it spans earnings and the ex-dividend date. The 30-delta put (510.00) yields 23.89% annualized, and the covered-call yield at the 560.00 strike is 20.50%. Options volume was 0.42 times its 20-day average, with a put/call volume ratio of 0.75 and a liquidity score of 100.

Analysis written October 28, 2026 from Qanvo data as of October 27, 2026. AI-generated, for information only; not investment advice.