u/helixinverse ·
Reddit — r/ValueInvesting
· March 06, 2026 at 11:57
· ⬆ 116 pts
· 💬 88 comments
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Summary
The post argues that Microsoft (MSFT) at $400 per share represents a fair value, a significant change from its previously elevated multiples.
The author's thesis is that for a high-quality business with strong moats, a large backlog, and AI tailwinds, a fair entry point offers a reasonable margin of safety for long-term investors.
The analysis is a high-level valuation argument based on historical multiple compression, rather than in-depth fundamental research or a discounted cash flow (DCF) model. It qualifies as a specific investment thesis but lacks deep supporting evidence.
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▶ Full Post Text
Microsoft is currently trading at these multiples, among the most attractive in six years:
* 22.38 Forward P/E
* 9.42 EV/Sales
These are some of the most compressed multiples Microsoft has traded at in the past six years, a meaningful re rating from peak forward P/E levels above 35x in 2023.
At around $400, Microsoft is not a screaming bargain, but it is fairly valued for the first time in years. For a business with durable enterprise moats, a $625B+ contracted backlog, AI tailwinds across Azure, Office, and GitHub Copilot, and $70B+ in annual free cash flow generation, a fair entry point is meaningful. For long term investors with a 3 to 5 year horizon, the current price offers a reasonable margin of safety relative to the quality of the business.
Detailed Analysis at: [https://bullstreet.substack.com/p/microsoft-at-fair-value-is-400-the](https://bullstreet.substack.com/p/microsoft-at-fair-value-is-400-the)
MSFT's forward P/E (22.38x) and EV/Sales (9.42x) multiples have compressed to their most attractive levels in six years, down from a peak forward P/E of over 35x in 2023. This re-rating provides a rare opportunity to buy a high-quality, durable business with significant AI growth drivers at a fair valuation, which has not been possible for several years. The current price of $400 offers a reasonable margin of safety for long-term investors, given the company's strong fundamentals, including a $625B+ backlog and over $70B in annual free cash flow. The market may continue to de-rate the stock due to slowing growth, competitive pressures in AI, or skepticism about the sustainability of its backlog (as noted in comments). A recent 20% dip after similar sentiment highlights volatility risk.
This Reddit post, published March 06, 2026,
features u/helixinverse
discussing MSFT.
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