Is Microsoft Stock Worth More Than Its Competitors?
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Apple is the only stock among a peer group of Alphabet, Amazon, Apple and Salesforce that costs more than Microsoft (MSFT) for each dollar of earnings. Apple trades at 38.7 times earnings, compared with 28.4 for Microsoft. Yet Microsoft keeps a larger share of its sales as operating profit than any of the four, Apple included. So how much more does Microsoft deliver than Apple, at the lower price?
Microsoft Beats Apple On Growth And Margin For Less
Microsoft grew revenue 17.9% over its latest four fiscal quarters, against 15.1% for Apple over its own. Its operating margin was 47.1%, against 33.0% for Apple. Yet over the year to November 9, 2026, Apple stock returned 30.5% including dividends, against 10.6% for Microsoft.
| MSFT | GOOGL | AMZN | AAPL | CRM | |
|---|---|---|---|---|---|
| Four Fiscal Quarters | ended 2026-09-30 (Q2 FY2026 to Q1 FY2027) | ended 2026-09-30 (Q4 FY2025 to Q3 FY2026) | ended 2026-09-30 (Q4 FY2025 to Q3 FY2026) | ended 2026-09-26 (Q1 FY2026 to Q4 FY2026) | ended 2026-07-31 (Q3 FY2026 to Q2 FY2027) |
| Market Value (USD billion) | 4049 | 3532 | 2882 | 5110 | 176 |
| P/E | 28.4 | 15 | 21.4 | 38.7 | 18.2 |
| Revenue Growth | 17.9% | 22.2% | 15.4% | 15.1% | 11.2% |
| Operating Margin | 47.1% | 33.3% | 13.1% | 33% | 21.5% |
| Total Return, Incl. Dividends, 2025-11-06 to 2026-11-09 | 10.6% | 1.5% | 9.8% | 30.5% | -9.4% |
Alphabet is the one peer that grew faster than Microsoft, at 22.2%, and its stock costs just 15.0 times earnings. But Alphabet’s net income over those four quarters was about 1.5 times its operating income, so part of the profit behind that low multiple came from outside its operations. Amazon and Salesforce cost less than Microsoft and grew more slowly.
Where Does Microsoft’s Growth Come From?
Microsoft’s fastest growth comes from its Intelligent Cloud segment, whose revenue rose 29.7% in fiscal 2026, against 15.9% for Productivity and Business Processes. More Personal Computing, the third segment, shrank 1.1%. Intelligent Cloud made up 41.5% of company revenue in fiscal 2026, up from 37.7% a year earlier.
In fiscal Q1 2027, management said Azure revenue rose 48% and that customer demand continues to exceed available supply. Microsoft’s operating margin has widened alongside that growth, rising to 49.8% in fiscal Q1 2027 from 48.9% a year earlier, though management said a shift in sales toward Azure partly offset that gain. Its operating margin over the past four quarters is the highest such figure at any of the 40 quarter ends since fiscal Q2 2017.
Can Microsoft Keep Growing While It Spends?
Management expects growth to hold, projecting revenue growth of 18% to 19% for fiscal Q2 2027 and Azure growth of 49% to 50% in constant currency. Microsoft reported revenue growth of 18.8% for fiscal Q1 2027.
Microsoft is paying for that growth in cash. Its free cash flow in fiscal Q1 2027 was about 28% below a year earlier, even as cash from operations rose 29%. Management said the lower free cash flow reflects higher capital spending. Management expects that spending to accelerate in the second half of fiscal 2027, partly because some capacity it was counting on for fiscal Q2 2027 moved into that half. Management also expects Microsoft to remain free cash flow positive in fiscal 2027.
Microsoft already delivers more than Apple, the one peer priced higher, on both growth and margin. At its price, you are paying for Microsoft to keep growing at about its current pace and to hold its margin while its spending climbs. Its latest quarter did both. Revenue growth and free cash flow in Microsoft’s January 2027 report are the numbers to watch.
Not Sure Microsoft Is Worth It At This Price?
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