Microsoft (MSFT) PE Ratio – Current & Historical Data

The MSFT PE ratio reveals how much you pay today for each dollar of Microsoft's earnings. It's more than just a number; it's a critical tool for every investor.

• A Major Assessment Gauge: It helps investors spot whether the stock is overvalued or undervalued compared to its peers and its own historical performance.
• Portfolio Impact: Shifts in the MSFT PE ratio can signal whether it's time to buy, hold, or trim your position in one of the world's largest technology stocks.

The Price-to-Earnings (P/E) ratio is calculated as:

P/E Ratio = Current Share Price / Earnings Per Share (TTM)

As of June 16, 2025, the MSFT PE Ratio (TTM) is 37.03.

A high PE ratio often implies that investors expect high future growth, while a low PE ratio might suggest the stock is undervalued or facing earnings challenges.

Microsoft's average PE ratio over the last decade (2015-2024) is approximately 31.25. The chart below illustrates the significant fluctuations, with a notable peak in 2017 and a dip in 2018, reflecting changing market sentiment and company performance.

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  Revenue Growth & Earnings Surprises

  Q3 FY2025 revenue hit $62.7 billion (+14.8% YoY), with EPS at $2.45 versus a $2.32 consensus. Consistent "beat-and-raise" cycles often push the PE ratio higher.

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  Profitability of Cloud & Windows Segments

  The operating margin for Azure grew to ~36% in Q3 FY2025, up from 33% a year prior. Expanding margins in key segments justifies a premium PE valuation.

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  Interest Rates & Market Sentiment

  With the Fed's terminal rate near 5.25%, every 0.25% hike can trim 1-1.5 points from a large-cap PE. Shifts between risk-on and risk-off sentiment increase PE volatility.

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  Share Buybacks & Dilution Impact

  An authorized $100 billion share buyback program for 2025 reduces the outstanding share count by ~2% annually, which supports a higher PE ratio.

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  Shaping Macro Trends (AI)

  An $80 billion investment in AI for 2025 is fueling adoption of Azure and Copilot. Global digital transformation budgets are growing 18% YoY, providing a strong tailwind.

• High PE (>40): Indicates the market is pricing in very strong future growth. Investors should be wary of any earnings miss, which could trigger a sharp correction.
• Mid-Range PE (30–40): Represents healthy growth expectations with a more balanced risk-reward profile. This is MSFT's current range.
• Low PE (<30): Could signal a potential buying opportunity if the company's fundamentals remain strong, or it could indicate underlying problems.

Analyst opinions are mixed, reflecting different views on growth moderation and AI potential:

• Bearish/Neutral View (D.A. Davidson): Sees conservative enterprise spending and moderating AI capital expenditures, suggesting the PE could drift down to ~32 by year-end (based on a $425 price target).
• Bullish View (Street Consensus): The average analyst price target of $519.56 implies a future PE ratio of ~40.2 (based on a projected EPS of $12.94), indicating continued optimism.
• Forward PE (33.23): The current forward PE suggests the market is pricing in an 8-10% earnings growth for 2026.