Buffett Brain · Research note
Score updated 25 Sept 2026 · analysis from 1 Jun 2026
MSFT· Technology
Microsoft
Microsoft is a magnificent toll bridge on the world's software, but at a 2.1% owner-earnings yield the toll on the buyer is steep.
Buffett fit
Strong fit
Owner
92
Durability
98
Management
75
Price
18
Score updated 25 Sept 2026 · analysis from 1 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Technology stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned the whole company at today's price I would be handing over a dollar for roughly two and a tenth cents a year in , since the owner-earnings yield is 2.14%.
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This is about as durable a franchise as exists in commerce, and the durability score of 98 reflects that.
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Management earns a 21.3% return on capital and keeps the balance sheet conservative, with of just 0.137 and interest covered 52.7 times over.
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Here is the rub. At a of 26.7 and an owner-earnings yield of 2.14%, there is no in this price, only optimism.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
6- 1 of 46.8% and of 68.3% mark a business with extraordinary and almost no rival on profitability.
- 2Five-year of 25.8% shows the has thrown off high returns consistently, not by accident.
- 3Durability score of 98 with zero meaningful peak-to-trough earnings decline points to a franchise customers cannot easily leave.
- 4Fortress balance sheet: of 0.137, net debt to EBITDA of 0.12, and interest coverage of 52.7 times.
Concerns
6- 1Valuation is the central problem: a of 26.7 and an owner-earnings yield of only 2.14% leave no , which is why the valuation score is just 18.
- 2EV/ of 26.2 means even on an enterprise basis you are paying a rich multiple for the operating earnings.
- 3 is only 70% of net income, so reported profits overstate the cash the heavy data-center spending leaves behind.
- 4An earnings yield of 3.75% is barely better than a safe bond, a poor reward for taking equity risk at this price.
Price history
$518+75.5%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Microsoft sells the software and cloud plumbing that businesses cannot easily run without, and it does so at a 68.3% and a 46.8% that few companies on earth can match. Revenue has compounded at 13.8% a year while earnings per share grew 13.97%, so this is a fast horse, not a tired one. The money keeps coming because customers pay year after year for Office, Windows, and Azure.
How this analysis has moved
The call has held across 2 reviews.
Sep 27, 2026 → Oct 4, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Technology
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