Over the past six months, Microsoft has been a great trade, beating the S&P 500 by 18.9%. Its stock price has climbed to $506.90, representing a healthy 27.7% increase. This was partly thanks to its solid quarterly results, and the run-up might have investors contemplating their next move.
Is now still a good time to buy MSFT? Or are investors being too optimistic? Find out in our full research report, it’s free.
Why Are We Positive On Microsoft?
Originally named "Micro-soft" for microcomputer software when founded in 1975, Microsoft (NASDAQ: MSFT) is a global technology company that develops software, cloud services, devices, and AI solutions for consumers, businesses, and organizations worldwide.
1. Skyrocketing Revenue Shows Strong Momentum
Microsoft proves that huge, scaled companies can still grow quickly. The company’s revenue base of $143 billion five years ago has nearly doubled to $281.7 billion in the last year, translating into an exceptional 14.5% annualized growth rate.
Over the same period, Microsoft’s big tech peers Amazon, Alphabet, and Apple put up annualized growth rates of 15.8%, 17.5%, and 8.3%, respectively. 
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it shows whether a company’s growth is profitable. It also explains how taxes and interest expenses affect the bottom line.
Microsoft’s EPS grew at an astounding 18.8% compounded annual growth rate over the last five years, higher than its 14.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills or invest for the future.
Microsoft has shown terrific cash profitability, driven by its lucrative business model that enables it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the software sector, averaging 29.5% over the last five years.
Final Judgment
These are just a few reasons Microsoft is a rock-solid business worth owning, and with its shares outperforming the market lately, the stock trades at 34× forward price-to-earnings (or $506.90 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More Than Microsoft
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
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