Date: 2026-05-08 Price: $416.25 (-25% from 52w high $555.45 on 2025-07-31) Verdict: Watchable, not a slam-dunk buy. First of the three (vs INTC, MU) where the Growth Stock Addendum (shr-004) actually works — implied growth ~6.5% is well below demonstrated ~12% EPS CAGR. Pulled back to near the lowest analyst PT ($400). Quality compounder in a 25% drawdown is a different proposition from chasing momentum highs.
| Item | Value |
|---|---|
| Market cap | $3.09T |
| Shares out | 7,429M (-1.5% over 4 years; net buybacks shrinking as SBC rises) |
| 52w range | $356.28 – $555.45 |
| 1y / 3y / 5y return | -4.3% / +38% / +76% |
| Dividend | 0.87% yield, 23 years no cut, 21 consecutive raises ($3.40 FY25) |
| Trailing P/E | 24.8x (TTM EPS $16.78) |
| Forward P/E (FY26) | 21.5x ($19.35 cons) |
| P/B | 7.5x (7.5x reported; tangible book ~$37/sh → ~11x P/TBV) |
| Net cash | +$21.3B |
| Drawdown from peak | -25.1% (this matters per shr-012) |
| Filter | Result | Notes |
|---|---|---|
| Size | PASS | $3.09T market cap |
| Current ratio ≥2.0 | FAIL (marginal) | 1.28x — this is the closest miss |
| 10yr earnings stability | PASS | Clean 20+ years, no losses |
| 20yr uninterrupted dividend | PASS | 23 years, never cut, 21 consecutive raises |
| EPS growth +33% over 10yr | PASS | FY15 EPS $1.48 → FY25 $13.64 = +821% |
| P/E ≤15x | FAIL | 24.8x trailing / 21.5x forward |
| P/B ≤1.5x | FAIL | 7.5x; P/E×P/B = 186 (cap 22.5) |
Score: 4/7 — best of the three (INTC 1/7, MU 3/7). Fails are P/E, P/B, and current ratio (the latter is marginal at 1.28x and reflects a quality balance sheet, not distress).
This is exactly the profile shr-004 was written for: a quality growth compounder that fails defensive value filters but should be screened with the Growth Stock Addendum.
| FY | Revenue | Op Inc | Net Inc | Diluted EPS | OCF | CapEx | Reported FCF | Op Margin |
|---|---|---|---|---|---|---|---|---|
| 2021 | ~$168B | ~$70B | ~$61B | ~$8.05 | ~$76B | $20B | ~$56B | 42% |
| 2022 | $198B | $83B | $73B | $9.65 | $89B | $24B | $65B | 42% |
| 2023 | $212B | $89B | $72B | $9.68 | $88B | $28B | $60B | 42% |
| 2024 | $245B | $109B | $88B | $11.80 | $119B | $44B | $74B | 45% |
| 2025 | $282B | $128B | $102B | $13.64 | $136B | $65B | $72B | 46% |
| TTM | $318B | ~$152B | $125B | $16.78 | $170B | $97B | $73B | ~47% |
3-year revenue CAGR 12%; 3-year EPS CAGR 12%+. Operating margins are expanding, not compressing, despite the AI capex surge. This is the critical anti-shr-032 signal.
| Quarter | EPS Actual | Cons | Beat | Azure cc YoY |
|---|---|---|---|---|
| Q4 FY25 | $3.65 | $3.38 | +8.1% | +35% |
| Q1 FY26 | $4.13 | $3.66 | +12.7% | +33% |
| Q2 FY26 | $4.14 | $3.92 | +5.7% | +31% |
| Q3 FY26 | $4.27 | $4.06 | +5.2% | +33% |
Azure growing 31-35% in constant currency, four quarters running. Beat spread is narrowing — the easy upside is gone.
This is the cleanest pass on shr-032 of any AI-exposed name screened so far:
Unlike CSCO/HPE/ADSK ("AI fog machine") or NOW/CRM ("AI wrappers"), MSFT's AI revenue and margin expansion are visible in segment data.
| Year | Reported FCF | SBC | SBC-adj FCF | Margin |
|---|---|---|---|---|
| FY22 | $65B | $7.5B | $58B | 29% |
| FY23 | $60B | $9.6B | $50B | 24% |
| FY24 | $74B | $10.7B | $63B | 26% |
| FY25 | $72B | $12.0B | $60B | 21% |
| TTM | $73B | $12.4B | $61B | 19% |
Critical risk: TTM CapEx $97B = 57% of OCF (vs 27% in FY22). The AI infrastructure ROI cycle is the central uncertainty. Bull: revenue acceleration validates the build. Bear: capex hardens into structural burden as depreciation ramps over FY27-30.
g = (P/E - 8.5) / 2
Per shr-003, the trailing/forward gap is small (1.6 ppt) — no profitability inflection being priced. The market is pricing continuation, not acceleration.
Per shr-004 (Growth Stock Addendum): buy when implied growth ≤ achievable growth + margin.
This is the first stock screened in this exercise where the Growth Stock Addendum gives an unambiguously favorable read.
| Sustained growth | Graham V | MoS vs $416 |
|---|---|---|
| 5% | $358 | -14% |
| 7% | $435 | +5% |
| 10% | $551 | +33% |
| 12% | $629 | +51% |
| 15% | $745 | +79% |
Breakeven growth: ~6.5%. If you believe MSFT can sustain ≥7% EPS growth (vs 12% demonstrated), you have positive expected return. At 10% — below recent CAGR — there's 33% MoS.
Open-market BUYS (12 months):
Open-market SELLS:
Key reading: The Stanton buy at $397 is the actionable signal. He's an independent director (not founding family per shr-035) buying his own money $2M of stock 3 months ago. Current price $416 is +4.7% above his entry — you're effectively buying alongside him at a small premium. Per shr-002, this matters more than C-suite sells which were mostly into 2025 highs ($500+).
Counterweight: TCI (Hohn) reportedly dumped ~$8B stake — sophisticated long-only exiting. Worth watching but TCI rotates frequently.
| INTC | MU | MSFT | |
|---|---|---|---|
| Position vs 52w high | At high | At high | -25% |
| vs mean analyst PT | +44-79% | +28% | -26% |
| Graham score | 1/7 | 3/7 | 4/7 |
| Growth Stock Addendum | Fails (34-48% req) | Marginal | Passes (6.5% req vs 12% delivered) |
| FCF | Negative 4 yrs | Capex-suppressed | Positive, large, but margin-compressing |
| Insider signal | Recent CLO sell at high | All C-suite selling | Director bought Feb @ $397 |
| Dividend | Suspended | Tiny, recent | 23 yrs, never cut |
| AI narrative test (shr-032) | Story not in financials | Cyclical proxy | In segment data |
This is the only one of the three names screened where the framework supports a starter position consideration, not just "pass." At $416:
But:
Practical conclusion for this portfolio: Already owned indirectly via VWCE (MSFT is ~5% of MSCI ACWI). Adding direct MSFT exposure on top of VWCE creates concentration to the same risk. The Graham satellite is for idiosyncratic value bets (AGN.AS, RI.PA, AIG) that VWCE doesn't tilt toward. MSFT direct adds market beta, not idiosyncratic alpha.
If you wanted dedicated US tech exposure, MSFT at $416 is the most defensible entry of any name screened recently. But it doesn't fit the satellite mandate. Watch, don't buy — would reconsider on a further drawdown to <$380 (toward Graham V at 5% growth) or stronger insider buy signal.