Is Microsoft Corp. overvalued or undervalued?

As of 17 October 2025, the valuation grade for Microsoft Corp. has moved from fair to very attractive, indicating a positive shift in its investment appeal. The company is currently considered undervalued based on its strong financial metrics. Key ratios include a P/E ratio of 36, an EV to EBITDA of 22.89, and a PEG ratio of 2.90, which suggest that the stock is priced favorably compared to its growth prospects.
When compared to peers, Microsoft Corp. has a lower P/E ratio than Oracle Corp. at 51.69 and a more favorable EV to EBITDA ratio than ServiceNow, Inc. at 88.55. Additionally, Microsoft's return over the past year stands at 23.24%, outperforming the S&P 500's return of 14.08%, reinforcing the notion that the stock is currently undervalued relative to its performance and growth potential.