Is Microsoft Corp. overvalued or undervalued?

As of 30 July 2025, the valuation grade for Microsoft Corp. has moved from fair to very attractive, indicating a strong improvement in its valuation outlook. Based on the current metrics, Microsoft appears to be undervalued, particularly when considering its P/E ratio of 36, which is lower than Oracle Corp.'s P/E of 51.69 and Intuit, Inc.'s P/E of 48.24, suggesting it may offer better value relative to its peers. Additionally, the company's EV to EBITDA ratio stands at 22.89, which is also more favorable compared to Oracle's 31.10, reinforcing the notion of relative undervaluation.
In terms of returns, Microsoft has outperformed the S&P 500 over the year with a return of 18.02% compared to the index's 17.14%, and it has significantly outperformed over three years with a return of 107.75% versus 70.41%. With a robust ROCE of 41.64% and a solid ROE of 30.18%, these metrics further support the conclusion that Microsoft is positioned well in the market, making it an attractive investment opportunity.