microsoftmsftvalue-investingbuffett-fit
We ran Microsoft through every value-investing framework on invest-like.com. Buffett scores 72/100, Graham 68, Fisher 70, Lynch 59, Greenblatt 59, Munger 72, T. Smith 68. The cleanest quality compounder in mega-cap misses the 47-stock cohort by one point on two frameworks.
What is the best PE ratio for value investing? There is no universal answer, here's the worked-example proof
Every beginner asks what PE ratio counts as cheap. The honest answer is that there is no universal number. A PE of 15 in software is a screaming bargain. A PE of 15 in a utility is fairly priced. A PE of 15 in a coal miner is expensive. We walk through three sectors with worked examples.
Value investing in tech, is it an oxymoron? 5 tech names that pass the framework consensus today
For decades Buffett refused to buy tech. Then he bought Apple in 2016 and made over 100 billion in gains. Munger bought BABA. The lesson: tech is not the opposite of value investing if you know what to look for. Five tech names that pass the invest-like 7-framework screen today.
Tesla (TSLA) through 7 value-investing frameworks: where Buffett, Graham, Lynch and Greenblatt agree (and disagree)
We ran Tesla through every value-investing framework on invest-like.com. Buffett scores 41/100, Graham 69, Fisher 34, Lynch 22, Greenblatt 3, Munger 33, T. Smith 39. Six of seven frameworks reject TSLA outright. The story under those scores is more interesting than the headline rejection.
Microsoft is the quietest mega-cap on the platform. NVIDIA is debated for its multiple. Apple is debated for the growth slowdown. Tesla is debated for, basically, everything. Microsoft generates 14% revenue growth, a 47% operating margin, a 21% ROIC and the most-durable enterprise customer base in software, and the framework debate is on a single question: is a 25x P/E too rich for a business that compounds at 14%?
The surprise in MSFT's seven-framework profile is what the answer turns out to be. Microsoft fails the strictest interpretation of two frameworks by a single point each, which keeps it out of the 47-stock all-seven cohort despite being, by almost any qualitative reading, the cleanest quality compounder in mega-cap. The data answer to "does Microsoft pass all seven?" is "no, but only by a hair on two of them."
We ran MSFT through all seven named-investor frameworks on invest-like.com in parallel and printed the scores side by side. Every number below is pulled from the production scoring tables on 26 May 2026, the same scores that power /buffett/msft/ and every public API response for ticker MSFT.
| Framework | Score | Grade | Verdict | Criteria met |
|---|---|---|---|---|
| Buffett (moat + quality) | 72 | B | yes | 7 / 9 |
| Munger (mental models) | 72 | B | yes | 10 / 11 |
| Fisher (growth quality) | 70 | B | unclear | 10 / 10 |
| Graham (defensive) | 68 | B | unclear | 3 / 7 |
| Smith (Fundsmith) | 68 | B | unclear | 11 / 12 |
| Greenblatt (Magic Formula) | 59 | C | unclear | 1 / 5 |
| Lynch (GARP) | 59 | C | unclear | 4 / 6 |
Cross-framework average: 66.9 out of 100. Minimum score: 59 (Greenblatt and Lynch, tied). Two of the seven scores fail the 60 pass-threshold the invest-like data study uses by a single point each, which means MSFT is not one of the 47 US-listed stocks that pass all 7 value-investing frameworks at a B-minus or better. The miss is by the narrowest margin of any mega-cap reviewed in this series. Source: the cross-framework consensus study, data snapshot 26 May 2026.
Headline numbers that drive every framework:
The rest of this post walks through each framework, explains why it scored MSFT the way it did, and surfaces where the seven authors agree and where they part ways - including the question of why MSFT misses the 47-stock cohort by such a narrow margin on two specific frameworks.
Microsoft's transformation from a Windows-license business to a cloud-and-subscription business is the most-cited "quality compounder" case study of the last decade. Azure runs at roughly 30% operating margin and is still growing in the high teens. Office 365 has converted the entire enterprise productivity stack to subscription. GitHub, LinkedIn and the OpenAI partnership give Microsoft a credible position in every layer of the AI stack.
The framework question is not whether the business is excellent (every framework agrees it is). The question is whether the current 25x P/E and 24.6x EV/EBIT leave enough margin of safety for the strictest value-investing frameworks to land at "yes." Microsoft's seven-framework profile is unusual because the scores cluster in an unusually narrow band (the spread is 13 points - 59 to 72 - versus 29 points for AAPL and 88 points for TSLA). That tight cluster reflects a stock where no framework finds a glaring fail but no framework finds an unambiguous bargain either.
The Magic Formula and Lynch frameworks land at exactly 59 each, one point below the cohort threshold, which is the data signature of a stock where the multiple sits right at the edge of every framework's tolerance.
The invest-like Buffett scorer marks MSFT as 7 of 9 criteria passing. The two failures cluster on the price half of the test: owner-earnings yield is 2.28% against the 5% floor, and earnings yield is 4.00% against the 5% floor (closer to the line than AAPL or NVDA but still below).
What passes:
What this score means in plain English: Microsoft is one of the only mega-caps where the Buffett framework lands at an unambiguous "yes" verdict. The Buffett Brain breaks the overall score into five pillars, and the split is the most balanced of any mega-cap reviewed in this series: moat 92, durability 98, management 47, valuation 38, financial health 48. The 98/100 durability score is the highest durability reading on the platform - the qualitative cache reads Microsoft's enterprise lock-in and switching costs as the most durable in mega-cap. The 38/100 valuation pillar is the same story every framework will tell: the business is excellent, the price has compressed the cushion.
The Buffett scorer's headline reads "Microsoft's cloud and productivity services drive a strong moat, but valuation metrics suggest limited margin of safety." That is the framework speaking, and it matches the qualitative read from Berkshire's stated reason for not owning MSFT (Buffett has been on record that Microsoft would have been a fit at a lower multiple but the timing never lined up).
The Graham score on MSFT is the second-narrowest pass of the seven frameworks, and the only Graham "unclear" verdict among the mega-caps reviewed in this series (AAPL is "yes", NVDA is "yes", TSLA is "unclear" through structural weighting).
On the three classic defensive-screen lines, MSFT performs better than AAPL but still fails:
So how does MSFT score 68? Because the invest-like Graham scorer applies the enterprising-investor weighting that gives partial credit for the three things MSFT does pass: decades of unbroken profitability (one of the longest profitability streaks in software), a paid dividend, and consistent revenue growth that exceeds the framework's structural floor. Microsoft's P/E and P/B are meaningfully closer to Graham's ceilings than Apple's are, which is why MSFT's Graham score (68) is lower than AAPL's (78) despite both failing on the same line items. The scorer's weighting partially compensates for valuation fails by structural credit; AAPL gets more structural credit because of its dividend record and float size.
This is a case where the headline score is a softer pass than the line-item count suggests. A strict five-rule Graham defensive screen on MSFT would fail every valuation line. The invest-like implementation gives MSFT a B-minus because the structural pillars compensate. A reader using MSFT as a Graham test case should know which version they are reading.
The summary the scorer prints is honest: "Meets 3/7 Graham criteria - partially qualifies." That phrasing is closer to accurate than the AAPL Graham summary.
This is the strangest scoring outcome in the entire seven-framework set. Microsoft passes 10 of 10 Fisher criteria - every single line item - but the score is 70 and the verdict is "unclear" rather than the "yes" that 10-of-10 would imply.
The criteria that pass:
So why is the score 70 and the verdict not a clean "yes"? Because the invest-like Fisher scorer applies a qualitative penalty when the EPS-outpaces-revenue gap is narrow. Fisher's "operational leverage" test is meant to detect businesses where margin expansion is happening over time. MSFT's EPS CAGR of 14.0% versus revenue CAGR of 13.8% is technically a pass (EPS does outpace revenue) but by only 20 basis points. Fisher's framework spirit wants to see EPS materially outpacing revenue (NVDA's 20-point gap, for instance, was a strong Fisher signal). MSFT's near-equal pace suggests the margin expansion phase of the cloud transition is largely complete and incremental growth is now coming from volume rather than margin.
This is the inverse of the Lynch pattern on NVDA. NVDA passed all six Lynch criteria but the framework's spirit penalised it for size. MSFT passes all ten Fisher criteria but the framework's spirit penalises it for the margin-expansion phase being mature. The score system encodes both kinds of framework-spirit nuance and surfaces them through the verdict, even when the criteria-met count is perfect.
The Lynch score on MSFT is one of the two scores that keeps Microsoft out of the 47-stock cohort. It falls one point below the 60 pass-threshold despite MSFT passing 4 of 6 Lynch criteria.
What passes:
What fails:
The 14% EPS CAGR against a 15% Lynch floor is the single most consequential one-percentage-point miss in this entire analysis. Lynch's GARP framework was calibrated around mid-cap "fast growers" doing 20-25% per year, with a 15% floor as the absolute minimum for the framework to even consider a stock. MSFT clears 14% per year, which would have been outstanding for a stock its size by any historical standard, but the framework treats anything under 15% as a fail.
The other fail is more conceptual: like AAPL, MSFT triggers Lynch's "stalwart" carve-out (the second of his six stock categories - large, well-known, slow-growing). Lynch's framework treats stalwarts as buyable for 30-50% appreciation rather than 10-baggers, and the carve-out softens the verdict from "no" to "unclear" - which is what we see. But the score itself is held down to 59 by the strict criteria-floor logic.
This is the cleanest example in the seven-framework set of a stock where a single percentage point on a single growth criterion is the difference between a 60+ score and a sub-60 score, which is the difference between making the 47-stock cohort and missing it.
The Magic Formula is the second framework that lands MSFT at exactly 59. Joel Greenblatt's Magic Formula passes 1 of 5 MSFT criteria:
By line-item count, this is a 1/5 fail. MSFT's 21.3% ROIC is below the Magic Formula's 25% floor by a hair (the 5-year average ROIC of 25.8% would clear it). The rank-based Magic Formula puts MSFT's ROIC in roughly the top 5-10% of the universe but the earnings-yield rank lands in the third quintile. Combined, the rank-based formula puts MSFT in the second decile on combined inputs, just outside the Formula's signature top-decile buy list.
The invest-like scorer compresses that into a 59/100 score, one point below the 60 threshold. The "unclear" verdict reflects the borderline math: MSFT is excellent but not the cheapest-and-highest-quality combination the Formula rotates into. NVDA's 91 Greenblatt score (driven by a 62.9% ROIC) is the kind of quality MSFT would need to compensate for its more modest earnings yield.
This is the second framework where MSFT misses the 47-stock cohort by the narrowest possible margin. If MSFT's ROIC ticks 4 points higher (to clear the Magic Formula's 25% floor) or its EV/EBIT compresses to 18 (still above the 12 ceiling but inside the rank-based pass band), the score crosses 60 and the cohort math changes.
Munger's mental-models filter passes 10 of 11 MSFT criteria, which is one of the cleanest Munger passes among mega-caps:
The 10-of-11 pass count drives the 72 score and the "yes" verdict. The single fail is the FCF-to-net-income conversion at 0.70, which is below the strict 0.80 cash-quality floor by a small margin. That is meaningful because Microsoft's reported earnings include a large stock-based compensation add-back; the 0.70 ratio reflects the gap between accounting earnings and cash earnings that SBC creates.
Munger's framework is structurally the most-favourable to MSFT in the seven-framework set because Munger explicitly built his framework to tolerate a higher P/E in exchange for genuine quality. MSFT at 25x trades inside Munger's softer ceiling (30); AAPL at 36 and NVDA at 46 sit outside it. The Munger verdict here is the cleanest framework "yes" Microsoft gets, and it is the framework that most closely matches the public commentary from quality-focused investors who do hold MSFT (Fundsmith, T. Rowe Price, the largest active managers in the world).
The Smith score on MSFT mirrors the Fisher pattern: 11 of 12 criteria pass but the verdict is "unclear" rather than a clean "yes." Terry Smith's Fundsmith framework uses a 20% ROCE floor, a 45% gross margin floor, a 95% FCF-to-net-income floor, and a P/E ceiling of 35.
What passes:
What fails:
The single fail is the same FCF-to-NI ratio that the Munger framework flagged. Smith's 0.95 floor is the strictest cash-quality test in the seven-framework set, and MSFT's 0.70 ratio is well below it (Microsoft converts only 70 cents of every dollar of accounting earnings into free cash flow, which Smith treats as a meaningful concern).
The score is 68 and the verdict is "unclear" rather than "yes" because the one fail is on the criterion Smith spent his entire fund-management career writing about: "free cash flow yield" rather than "earnings yield" is the cornerstone of the Fundsmith philosophy. Smith would not hold a stock where the FCF conversion is below 0.95 sustainably; MSFT's 0.70 ratio (driven by stock-based compensation accounting) is a real signal even if the underlying business is excellent.
Fundsmith has historically held MSFT at meaningful weight despite this criterion, which is itself interesting: the fund treats Microsoft as the rare exception to the 0.95 rule, which the scoring system does not soften.
Despite seven different lenses, four things show up in every scoring breakdown:
Three points of disagreement:
No, but by the narrowest possible margin. MSFT's minimum framework scores are 59 (Greenblatt) and 59 (Lynch), which both fall one point below the 60 pass-threshold. The cross-framework average of 66.9 is below NVDA (83.4) and below AAPL (73.6) but well above the universe median.
If MSFT's ROIC ticks up 4 points (to clear Greenblatt's 25% floor) or its EPS growth ticks up 1 point (to clear Lynch's 15% floor), the cohort math flips and Microsoft joins the 47. Neither tick is implausible; both are inside the noise band of a typical quarter's reported results. The data signature here is a stock that sits right at the edge of the cohort, missing by a hair on two specific frameworks rather than failing structurally on any of them.
The full 47-stock consensus list is in our cross-framework data study. The headline finding there is that 0.71% of the 6,621 stocks scored on every framework pass all seven at a B-minus or better. MSFT is the highest-quality stock on the platform that misses the cohort by a single-point margin on two frameworks - which is itself a useful data finding: the 47-stock cohort excludes some businesses that almost any qualitative reader would call elite, because the thresholds are strict and uniform.
That is not a recommendation to buy. It is the data answer to a question the value-investing canon implicitly poses: when all seven of these authors are asked the same question, do they all say yes? On MSFT, five say yes, two say "unclear" by 1 point each, and zero say no. The data answer to "is MSFT a quality compounder by consensus" is "yes by 5/7, unclear by 2/7, no by 0/7" - which is the cleanest "almost-but-not-quite" the platform produces.
Yes. invest-like.com's halal screener applies the AAOIFI Standard 21 criteria as implemented in our halal screening methodology. MSFT's interest-bearing debt to market cap ratio is 1.29%, well below the 30% AAOIFI ceiling. The business activity (software, cloud, productivity services, gaming) is not on the prohibited-industry list. The non-permissible income ratio (interest income from cash holdings, gaming revenue from titles that may carry impermissible content) is below the 5% threshold.
MSFT shows up on /halal/msft/ as compliant, and the halal status field in the database (halal_status = 'compliant') is consistent with that. For halal-mode users, the framework results above are unchanged - the AAOIFI test sits on top of the value-investing test as an additional filter, not a replacement. Microsoft is among the largest AAOIFI-compliant companies in the world by market cap and is held in most major Sharia-compliant ETFs.
The seven-framework breakdown is not a "buy MSFT" or "sell MSFT" signal. It is a structured way to see which value-investing lenses agree on the business and which disagree on the price. Three observations a reader might draw, none of which are advice:
First, the framework dispersion on MSFT is much tighter than on AAPL or TSLA. The 13-point spread (59 to 72) is the narrowest of the three mega-caps in this series. That tight cluster is the data signature of a business where the canon's seven authors largely agree on both the quality and the price - which is itself a rare outcome.
Second, the two frameworks that hold MSFT out of the 47-stock cohort (Greenblatt at 59, Lynch at 59) miss by exactly one point each. The cohort exclusion is real but it is not structural; a single quarter's earnings could close the gap. This is the cleanest "borderline-but-real" exclusion in the entire seven-framework set.
Third, the 0.70 FCF-to-NI ratio is the under-discussed flag. Smith's 0.95 floor and Munger's 0.80 floor both fail or barely-pass on this criterion, and the cause is the stock-based compensation accounting that Microsoft (like most software companies) uses heavily. If you weight SBC as a real expense (which Smith does), MSFT's effective valuation is higher than the headline 25x P/E suggests. If you treat SBC as non-cash and dilutive but not a direct cost (which many sell-side analysts do), the headline numbers stand.
The Boardroom feature on /boardroom/msft/ runs the four-investor debate in long form and is the natural follow-on to this post. It lets the four authors argue the SBC and growth-threshold questions directly rather than letting the scorers paper over them.
Because two frameworks (Greenblatt and Lynch) rate it 59/100, which falls one point below the 60 pass-threshold the data study uses. Greenblatt's score is held down by the Magic Formula's strict ROIC floor of 25% (MSFT's 21.3% is below it, though the 5-year average of 25.8% would clear). Lynch's score is held down by the GARP framework's 15% EPS growth floor (MSFT's 14.0% is one point below). Both misses are within the noise band of a typical quarter's earnings result, but the cohort threshold is strict by design.
Less obviously than AAPL or NVDA, but every framework with a price test flags it. By Graham's strict defensive rules, the 25 P/E is 67% above his ceiling - meaningfully expensive but less so than AAPL's 36 or NVDA's 46. By Buffett's owner-earnings yield (above 5%), MSFT's 2.28% fails by half. By Greenblatt's earnings yield (above 6%), MSFT's 4.0% fails but is closer to the threshold. By Munger's softer 30 P/E ceiling, MSFT actually passes. By Fisher's 35 P/E ceiling and Smith's 35 P/E ceiling, MSFT passes comfortably. The seven-framework view: four say expensive, three say tolerable for the quality.
By the invest-like scorer, yes - 72/100 with a "B" letter grade and verdict "yes." 7 of 9 criteria pass, with the two fails on the price half. The Buffett Brain pillars are moat 92, durability 98, management 47, valuation 38, financial health 48. The 98/100 durability is the highest reading on the platform. Buffett has been on record that Microsoft would have been a fit at an earlier point but the timing never lined up; the framework score is consistent with a "this would have been a Buffett stock at a lower multiple" reading.
The invest-like 47-stock cross-framework consensus cohort contains several software and platform names with cleaner cohort math. Alphabet (GOOGL) trades at a lower P/E with similar growth and clears the cohort. NVIDIA (NVDA) trades at a higher multiple but clears all 7 thanks to extreme ROIC. Adobe (ADBE) is a smaller-cap quality compounder that clears the cohort with room. The cleanest pure peer comparisons are on the MSFT vs GOOGL, MSFT vs AAPL and MSFT vs ADBE pages.
Because the invest-like Fisher scorer applies a qualitative penalty when the EPS-outpaces-revenue gap is narrow. Fisher's "operational leverage" test wants to see EPS materially outpacing revenue (NVDA's 20-point gap, for instance, is a strong Fisher signal). MSFT's EPS CAGR of 14.0% versus revenue CAGR of 13.8% is technically a pass but by only 20 basis points, which Fisher's framework spirit reads as a sign that the margin-expansion phase of the cloud transition is mature. The 10-of-10 criteria-met count and the 70/100 score are both correct; the framework's spirit is encoded in the score rather than the criteria count.
Yes, by AAOIFI Standard 21 as implemented on invest-like. MSFT's interest-bearing debt to market cap is 1.29%, well below the 30% ceiling. Its business activity (software, cloud, productivity, gaming) is not prohibited. Non-permissible income from cash interest is below the 5% threshold. The halal status field returns "compliant" on every API response for ticker MSFT. Halal-mode users can include MSFT in their watchlist with a small purification proportion for interest income; the /halal/msft/ page surfaces the exact ratios. Microsoft is among the largest AAOIFI-compliant companies in the world.
The strategy scores in the database refresh roughly every two weeks against the latest FMP fundamentals snapshot. The Buffett Brain pillar breakdown is cached for 30 days and re-runs on a schedule. The cross-framework data study underlying the 47-stock cohort is dated and re-runs quarterly. Specific number citations in this post are stable against the 26 May 2026 snapshot but will drift over time as new earnings get ingested. Given how close MSFT sits to the cohort threshold, a single strong quarter could flip its 47-stock status.
This is an educational analysis of how seven separately implemented value-investing frameworks score one stock. It is not investment advice, not a buy or sell recommendation, and not a substitute for reading the original Buffett shareholder letters, Graham's Intelligent Investor, Fisher's Common Stocks and Uncommon Profits, Lynch's One Up on Wall Street, Greenblatt's Little Book that Beats the Market, Munger's Poor Charlie's Almanack, or Smith's Investing for Growth. The framework scores are deterministic outputs from financial-statement criteria; they do not predict price. Past performance of Microsoft stock (or any stock) is not a forecast.
All scores cited in this post come from invest-like.com's strategy_scores and buffett_analyses production tables, snapshot 26 May 2026. The methodology for each scorer is documented at /methodology/, and per-framework rule sets are at /methodology/buffett-fit/ and /methodology/deal-breakers/. The same scoring logic powers every verdict on the production site, including the per-ticker page at /buffett/msft/ and the public API response at /api/public/verdict/MSFT.
If you want to run the same seven-framework treatment on a stock you actually own, paste its ticker into the search bar on the homepage. The free tier gives three full verdicts a week. The 47-stock all-seven-frameworks cohort that MSFT just misses is browsable at /blog/12500-stocks-7-frameworks-cross-framework-consensus/. For the same treatment on other mega-caps, see our deep dives on NVIDIA (NVDA), Apple (AAPL) and Tesla (TSLA).