Verdict
Fairly valued
What is Microsoft Corporation (MSFT) worth?
Currently $397.75 — 1% premium to Dolphy’s fair value · ● live
Steady operator
medium confidence in the point estimate
● live · as of 2026-07-21 21:13 · Market cap $2.9T
As of 2026-07-15, Microsoft Corporation (MSFT) looks fairly valued. Dolphy estimates a fair value of $392.00 versus a current price of $397.75 — a 1% premium to fair value.
Executive summary
Microsoft trades at roughly fair value (~$385 vs a ~$392 fair value). It remains one of the highest-quality businesses in the market — ~$282B FY25 revenue at ~46% operating margin, ~34% ROE, near-zero net leverage, and a commercial backlog (RPO) that nearly doubled to $627B. The story now hinges on one thing: the AI datacenter capex supercycle. Capex has surged to ~$97B TTM (~34% of revenue, up from ~$44B two years ago), compressing free cash flow to ~$72B even as operating cash flow runs ~$170B. Azure (+40%) and Microsoft Cloud (+29%) show the demand is real, but the return on that capital is the open question that defines the bull/bear gap.
My conservative DCF (8.5% WACC, normalized FCF) yields ~$323; a quality-adjusted 7.5% WACC yields ~$398; normalized-EPS comps yield ~$439. Blended and probability-weighted for capex outcomes, fair value is ~$392 — essentially where the stock trades. This is a fairly valued premier compounder, not a bargain and not a short. You are paid to own the franchise and its optionality, but the current price already embeds successful AI monetization.
How we value it
DCF (two-stage FCF) cross-checked with normalized-EPS peer comps; probability-weighted for AI capex outcomes
Every figure is computed from SEC filings by the analyst’s calculator tools and fact-checked by a second, independent model.
Investment thesis
About Microsoft Corporation
Microsoft Corporation develops and supports software, services, devices, and solutions worldwide. The Productivity and Business Processes segment offers Microsoft 365 commercial, enterprise mobility + security, windows commercial, power BI, exchange, sharepoint, Microsoft teams, security and compliance, and copilot; Microsoft 365 commercial products, such as Windows commercial on-premises and office licensed services; Microsoft 365 consumer products and cloud services, including Microsoft 365 consumer subscriptions, office licensed on-premises, and other consumer services; LinkedIn; dynamics products and cloud services, such as dynamics 365, cloud-based applications, and on-premises ERP and CRM applications. Its Intelligent Cloud segment provides Server products and cloud services comprising Azure and other cloud services, GitHub, Nuance Healthcare, virtual desktop offerings, and other cloud services; server products, including SQL and windows server, visual studio and system center related client access licenses, and other on-premises offerings; enterprise and partner services, such as enterprise support and nuance professional services, industry solutions, Microsoft partner network, and learning experience. The Personal Computing segment provides windows and devices, such as Windows OEM licensing and devices and surface and PC accessories; gaming services and solutions, such as Xbox hardware, content, and services, first- and third-party content Xbox game pass, subscriptions, and cloud gaming, advertising, and other cloud services; search and news advertising services. It sells its products through OEMs, distributors, and resellers; and online and retail stores. The company has a strategic collaboration with Mayo Clinic, Inc. for the development of a frontier AI model for healthcare; and Global Objects, Inc. to build a retrieval-grounded generative AI world model. The company was founded in 1975 and is headquartered in Redmond, Washington.
Frequently asked questions
Is MSFT a buy?
As of 2026-07-15, Microsoft Corporation (MSFT) looks fairly valued. Dolphy estimates a fair value of $392.00 versus a current price of $397.75 — a 1% premium to fair value.
What is MSFT's fair value?
Dolphy's estimated fair value for Microsoft Corporation (MSFT) is $392.00, versus a current market price of $397.75.
Is MSFT overvalued or undervalued?
Microsoft Corporation (MSFT) currently looks fairly valued — trading at a 1% premium to Dolphy's estimated fair value of $392.00.
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AI-generated research by Dolphy for educational and informational purposes only — not investment advice. Figures are computed from public sources and may contain errors.