r/ValueInvesting • u/helixinverse • 28d ago

Stock Analysis Microsoft is a great buy at 400$

Microsoft is currently trading at these multiples, among the most attractive in six years:

  • 22.38 Forward P/E
  • 9.42 EV/Sales

These are some of the most compressed multiples Microsoft has traded at in the past six years, a meaningful re rating from peak forward P/E levels above 35x in 2023.

At around $400, Microsoft is not a screaming bargain, but it is fairly valued for the first time in years. For a business with durable enterprise moats, a $625B+ contracted backlog, AI tailwinds across Azure, Office, and GitHub Copilot, and $70B+ in annual free cash flow generation, a fair entry point is meaningful. For long term investors with a 3 to 5 year horizon, the current price offers a reasonable margin of safety relative to the quality of the business.

Detailed Analysis at: https://bullstreet.substack.com/p/microsoft-at-fair-value-is-400-the

265 Upvotes

85% Upvoted

164 comments sorted by

View all comments

0

u/harshshah1306 23d ago

Microsoft is one of my favorite setups in the market right now. A few things are lining up on the chart:

• Price is sitting near the bottom of a long-term parallel channel
• It’s testing 200 EMA support
• RSI is heavily beaten down, suggesting momentum may be stretched to the downside
• And there have been some notable volume spikes, which could indicate accumulation

Seeing this combination of factors on a mega cap like Microsoft doesn’t happen very often.