Microsoft (NASDAQ: MSFT) Stock Trades At A Premium As Earnings Growth Slows And Capital Spending Surges

• Microsoft hit record $543.45 on Oct 13, now near $530, trading at ~31x fiscal 2026 earnings • Fiscal 2026 revenue rose 18% to $331.8B; adjusted EPS grew 22% to $17.28 • Fair value estimate around $465/share given slowing growth guidance and rising capex Microsoft hit a record $543.45 on October 13 before pulling back to around $530. Fiscal 2026 (ended June 30) was strong: revenue rose 18% to $331.8 billion, operating income climbed 21% to $155.2 billion, and adjusted EPS (excluding OpenAI investment effects) grew 22% to $17.28, with similar momentum in both the first and fourth quarters. At roughly $530, shares trade near 31 times fiscal 2026 adjusted earnings, versus about 26 times for the S&P 500 — a steep premium that's harder to justify given management's guidance pointing to slower operating income growth in the September quarter even as capital spending keeps rising. Microsoft reports fiscal Q1 2027 results after market close on October 28. A fair-value estimate using a ~27x multiple on $17.28 adjusted EPS puts buy price near $465, about 12% below current levels. Free cash flow actually dipped last fiscal year despite surging capex, raising doubts about near-term investment returns. Until the stock corrects to better reflect decelerating growth and rising costs, the risk-reward for new buyers looks unfavorable.