Microsoft stock is at an all-time high, considered expensive with growth potential in AI

From NASDAQ.: 2025-07-01 20:00:00

Shares of Microsoft (NASDAQ: MSFT) are up 18% this year, reaching a new all-time high. Trading at around 38 times its trailing earnings, the stock is considered expensive but has many growth opportunities, especially in artificial intelligence (AI). Investors are bullish on its long-term future, but the high valuation raises questions about adding it to a portfolio.

Microsoft’s stock valuation hit a record level of $3.7 trillion, making it one of the most highly valued stocks in the market. With a high price-to-earnings (P/E) multiple, Microsoft appears expensive compared to its historical average. While not wildly overpriced, the stock’s premium reflects investor confidence in its performance and future growth potential, particularly in AI.

Microsoft’s growth has been driven by acquisitions like Activision-Blizzard and investments in AI. The AI business generates $13 billion annually, contributing to the tech giant’s $270 billion in sales over the past year. Although there is room for growth with AI-powered PCs, economic conditions may delay significant impact. Despite being a good long-term investment, the high valuation may warrant caution in buying Microsoft stock now.

Considering the lack of margin of safety and potential tech spending slowdown, it’s advisable to monitor Microsoft’s stock rather than buy at its current valuation. The Motley Fool Stock Advisor team identified other attractive investment opportunities, suggesting caution with Microsoft. For potential high returns, explore the top 10 stocks recommended by Stock Advisor for future growth opportunities.



Read more at NASDAQ.: Should You Buy Microsoft Stock Now or Wait for a Dip?