---
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/40305399.md"
description: "The latest earnings report provides the core input for the valuation model.Microsoft's FY26 Q3 fundamentals are very strong: revenue of $82.886 billion, up 18% year-over-year; operating profit of $38.398 billion, up 20% YoY; net profit of $31.778 billion, up 23% YoY; diluted EPS of $4.27, up 23% YoY. Azure and other cloud services revenue grew 40% YoY, 39% in constant currency; Microsoft Cloud revenue reached $54.5 billion, up 29% YoY; AI business annual revenue run rate exceeded $37 billion, up 123% YoY. However, pressure on the cash flow side is also evident: Q3 operating cash flow was $46.679 billion, property and equipment additions were $30.876 billion; capex for the first three quarters was already $80.146 billion, compared to $47.472 billion in the same period last year. In other words, Microsoft's profits are good, but AI data center investments are swallowing a significant portion of its free cash flow. Therefore, valuation cannot rely solely on PE, but must also consider P/FCF simultaneously.⸻2. Current Valuation: PE is no longer expensive, but FCF remains expensive.Different data sources update at slightly different speeds, so using a range is more reasonable:Metric	Current Approx. Level	History/Comparison	My InterpretationTTM PE	25–27x	10-year average/median ~31–33x	Significantly below historical medianForward PE	22–24x	Below the average PE of the last 3–5 years	Not expensive for a company of Microsoft's qualityPS	~10.2x	10-year median ~10.27x	Roughly at historical medianEV/EBITDA	~16–17.5x	10-year median ~19.5x	Below historical medianP/FCF	~40–43x	10-year median ~33x	Still relatively expensive, core reason is heavy capexFinanceCharts shows MSFT PE at 26.55x, forward⸻4. Valuation Range Using FY2027 EPSFinanceCharts' forward PE is ~22.08x, corresponding to a current price of ~$424, implying a forward EPS of ~$19.2. StockAnalysis also shows Microsoft's 5-year EPS growth forecast is ~14.58%, indicating the market still views it as a double-digit growth company, not a mature low-growth software company. Rough estimate using FY2027 EPS = ~$19:Scenario	Assigned PE	Corresponding Stock PricePessimistic: AI capex continues to be penalized	20x	~$380Conservative: Maintain current forward PE	22x	~$418Neutral: Quality premium recovers somewhat	24x	~$456Moderately Optimistic: Return to reasonable growth stock valuation	26x	~$494Optimistic: AI narrative re-expands	28x	~$532Strong Bull: Return near 10-year PE median	32–33x	~$608–$627Therefore, the current price around $424 roughly reflects: the market is willing to give Microsoft ~22x FY2027 EPS, but is temporarily unwilling to give it a higher premium for AI."
datetime: "2026-04-30T00:31:27.000Z"
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  - [en](https://longbridge.com/en/topics/40305399.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/40305399.md)
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author: "[阿米巴星人](https://longbridge.com/en/profiles/11255863.md)"
---

# The latest earnings report provides the core input…


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## Comments (2)

- **阿米巴星人 · 2026-04-30T02:21:14.000Z**: I bought Microsoft this year, with an average cost of 385 for the common stock. The biggest reason for buying it was that it was cheap. I also reduced most of my positions in Google and Amazon's common stock a while ago. Why did I sell? Because I thought they were expensive.Looking back in the rearv
- **九张机 · 2026-04-30T01:36:13.000Z**: Bro's words are fair, the option open interest is temporarily betting on 450 stars, with long-term optimism at 480.