Is Microsoft Corp. overvalued or undervalued?

As of 26 March 2025, Microsoft Corp. has moved from a fair to an attractive valuation grade. The company is currently considered undervalued. Key ratios include a P/E ratio of 36, an EV to EBITDA of 22.89, and a ROE of 30.18%. In comparison to peers, Oracle Corp. has a higher P/E of 45.21 and EV to EBITDA of 29.52, while Adobe, which is also attractive, has a lower P/E of 31.91 and EV to EBITDA of 24.12.
Microsoft's recent stock performance has outpaced the S&P 500, with a year-to-date return of 15.30% compared to the index's 2.44%. This strong performance, combined with its attractive valuation metrics, reinforces the conclusion that Microsoft is undervalued in the current market.