Microsoft (NASDAQ: MSFT) is currently trading 30% below its all-time high from July 2025, valued at less than the S&P 500 for the first time in years. As of now, it is priced at less than 20 times forward earnings, significantly under its big tech peers, which generally trade at multiples in the mid to high 20s. This valuation arises amidst a backdrop of strong earnings growth, with revenue increasing by 18% and earnings per share rising 23% in the last quarter.
The company reported impressive results primarily driven by its artificial intelligence revenue, which surged 123% year over year to an annual run rate of $37 billion. Additionally, its cloud computing division grew by 40%. Microsoft is set to announce its next earnings report on July 29, with analysts anticipating that the company’s solid performance will help realign its stock valuation with that of its counterparts.
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