Microsoft Is Cheaper Than the S&P 500. Now Is the Perfect Time to Load Up on the Stock.
2026-07-14 19:15
•Keithen Drury •The Motley Fool
••••• ••••••• Axe Capital view
Microsoft's Dip Looks Like a Buying Opportunity
Microsoft trades cheaper than the S&P 500 amid strong AI and cloud growth, suggesting undervaluation.
Microsoft’s shares have dropped about 30% since their peak, now trading below 20 times forward earnings—less than the S&P 500’s 21.7x multiple. For a company growing AI revenue by 123% and cloud services by 40%, this looks like a discount you don’t see often. While US tech pullbacks usually don’t immediately lift South African stocks, there are indirect benefits. Prosus, South Africa’s tech giant with heavy US exposure, could see renewed support if Microsoft leads a tech rebound. The rand (USD/ZAR) might get some relief as dollar strength eases with calming US tech fears. That said, the global macro isn’t stable yet. A surprise rate hike or economic slowdown could derail this rally. Still, for investors with time and patience, Microsoft’s current valuation seems too cheap to ignore. this is just my opinion and not financial advice
Add Microsoft via global ETFs or ADRs on weakness and watch Prosus for possible follow-through. Keep some cash ready to buy more if the broad tech selloff deepens.
- MSFT
- Prosus
- USD/ZAR
- US interest rate surprises
- global tech slowdown
7/10
Microsoft stock has fallen approximately 30% from its July 2025 all-time high and now trades at less than 20 times forward earnings, below the S&P 500's 21.7x multiple and cheaper than its big tech peers. Despite the discount, the company's latest quarterly results show strong fundamentals with AI revenue up 123% year-over-year, cloud computing growth of 40%, and overall revenue up 18%, suggesting the stock is undervalued and poised for recovery.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Keithen Drury
Categories: Equities, Earnings, Technology, AI, Semiconductors
Tickers: MSFT, GOOG, GOOGL, GOOGM, GOOGN, AMZN, AAPL
Sentiment: Positive - Stock is trading at a significant discount (under 20x forward earnings vs. S&P 500 at 21.7x) compared to peers, while demonstrating strong fundamentals with 123% AI revenue growth, 40% cloud growth, and 18% overall revenue growth. Author views current valuation as unjustifiably low and expects recovery. Mentioned as a peer trading at mid-to-high 20s forward earnings multiple for comparison purposes, but no specific analysis or recommendation provided.
Keywords: Microsoft valuation, forward earnings multiple, AI revenue growth, cloud computing, tech stock discount, earnings announcement
Insights:
- MSFT: Positive: Stock is trading at a significant discount (under 20x forward earnings vs. S&P 500 at 21.7x) compared to peers, while demonstrating strong fundamentals with 123% AI revenue growth, 40% cloud growth, and 18% overall revenue growth. Author views current valuation as unjustifiably low and expects recovery.
- GOOG: Neutral: Mentioned as a peer trading at mid-to-high 20s forward earnings multiple for comparison purposes, but no specific analysis or recommendation provided.
- GOOGL: Neutral: Mentioned as a peer trading at mid-to-high 20s forward earnings multiple for comparison purposes, but no specific analysis or recommendation provided.