MicrosoftCHIX:MSFD -0.18%85 Pretax Margin % is 47.46% as of Mar. 2026, which is 20% above its 10-year median of 39.61. GuruFocus rates CHIX:MSFD with a GF Score™ of 85/100 and a GF Value™ of €491.76 (Significantly Undervalued). The stock has 2 warning signs investors should review. Among 2,823 Software companies, Microsoft ranks better than 97.48% on this metric.
Pre-Tax margin is calculated as Pre-Tax Income divided by its Revenue. Microsoft's Pre-Tax Income for the
three
months ended in Mar. 2026 was €34,029 Mil. Microsoft's Revenue for the
three
months ended in Mar. 2026 was €71,696 Mil. Therefore, Microsoft's pretax margin for the quarter that ended in Mar. 2026 was 47.46%.
The historical rank and industry rank for Microsoft's Pretax Margin % or its related term are showing as below:
CHIX:MSFd'
s Pretax Margin % Range Over the Past 10 Years
Min: 28.13 Med: 39.61 Max: 48.54
Current: 48.54
CHIX:MSFd's Pretax Margin % is ranked better than 97.48% of 2823
companies
in the Software industry
Industry Median: 3.54
vs CHIX:MSFd: 48.54
Microsoft (CHIX:MSFd) Pretax Margin % Explanation
The pretax margin, as know as pretax profit margin, is widely used to measure the operating efficiency of a company before deducting taxes.
The pretax margin is sometimes preferred over the net margin as tax expenditures can make profitability comparisons between companies misleading.
It is a useful tool to compare companies operating in the same sector and less effective when comparing companies from other sectors as each industry generally has different operating expenses and sales patterns.
The long term trend of the pretax margin is a good indicator of the competitiveness and health of the business.
Microsoft Pretax Margin % Related Terms
Microsoft Pretax Margin % Historical Data
* Premium members only.
The historical data trend for Microsoft's Pretax Margin % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
CHIX:MSFD vs ORCL, PLTR, PANW: Pretax Margin % Comparison
For the Software - Infrastructure subindustry, Microsoft's Pretax Margin %, along with its competitors' market caps and Pretax Margin % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Microsoft Pretax Margin % vs Software Industry
For the Software industry and Technology sector, Microsoft's Pretax Margin % distribution charts can be found below:
* The bar in red indicates where Microsoft's Pretax Margin % falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Microsoft (CHIX:MSFD) has a Pretax Margin % of 47.46% as of Mar. 2026. Pre-Tax margin is the ratio of total pre-tax income to net sales. View historical data on Microsoft and its competitors. This is 20% above median its historical median of 39.61. Over the past decade, Microsoft's Pretax Margin % has ranged from 28.13 to 48.54. According to the industry distribution chart, Microsoft ranks #71 out of 2823 companies in the Software industry, placing it in the top 2.5%.
Is Microsoft's Pretax Margin % too high?
Microsoft's current Pretax Margin % of 47.46% is 20% above median its 10-year median of 39.61. Over the past 10 years, this metric has ranged from a low of 28.13 to a high of 48.54. The Software industry median Pretax Margin % is 3.54. Microsoft's value of 47.46% is 1240.7% above this industry median. Based on the distribution chart, Microsoft ranks #71 out of 2823 companies in the Software industry, which is in the top quartile — a strong position relative to peers. Overall, Microsoft has a GF Score™ of 85/100 and is considered Significantly Undervalued, reflecting its overall financial health beyond just this single metric.
How does Microsoft's Pretax Margin % compare to ORCL and PLTR?
According to the Software industry distribution chart, Microsoft ranks #71 out of 2823 companies for Pretax Margin %. This places Microsoft in the top 3% of its industry — outperforming the majority of peers. The industry median Pretax Margin % is 3.54. Microsoft's value of 47.46% is 1240.7% above this benchmark. Historically, Microsoft's own Pretax Margin % has ranged from 28.13 to 48.54 over the past decade. While the company's 10-year median is 39.61 vs. the industry median of 3.54, Microsoft has consistently been above the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Pretax Margin % for a Software company?
The median Pretax Margin % among Software companies is 3.54, based on 2,823 companies in the industry. Companies in the top quartile (top 25%) have a Pretax Margin % significantly above this median, while those in the bottom quartile fall well below. However, Pretax Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Microsoft's current Pretax Margin % of 47.46% is 1240.7% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Pretax Margin % mean?
A high Pretax Margin % can signal that a stock is expensive relative to its fundamentals. Pre-Tax margin is the ratio of total pre-tax income to net sales. View historical data on Microsoft and its competitors. For the Software industry, the median Pretax Margin % is 3.54 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Microsoft's current Pretax Margin % is 47.46%, which is 20% above median its own 10-year median of 39.61. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Microsoft stock overvalued right now?
Based on GuruFocus' analysis, Microsoft (CHIX:MSFD) is currently considered Significantly Undervalued. The stock's GF Value™ is €491.76, compared to a current price of €329.50 — trading 33% below its estimated fair value. The current Pretax Margin % is 47.46%, which is 20% above median its 10-year median of 39.61 and 1240.7% above the Software industry median of 3.54. Microsoft's overall GF Score™ is 85/100 with 2 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Pretax Margin % calculated?
Pretax Margin % is calculated from a company's financial statements. For Microsoft (CHIX:MSFD), the current Pretax Margin % is 47.46% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Microsoft (CHIX:MSFD) Overvalued in 2026?
Based on GuruFocus' analysis, Microsoft stock appears to be undervalued.
The current stock price of €329.50 is trading 33% below its estimated GF Value™ of €491.76.
GuruFocus considers Microsoft to be Significantly Undervalued.
Key valuation signals for CHIX:MSFD:
Pretax Margin %: 47.46% (20% above median its 10-year median of 39.61)
GF Value™: €491.76 vs. price of €329.50 (33% below fair value)
Industry Position: 1240.7% above the Software median (#71 of 2823)
No single metric tells the full story. See the CHIX:MSFD stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Microsoft develops and licenses consumer and enterprise software. It is known for its Windows operating systems and Office productivity suite. The company is organized into three equally sized broad segments: productivity and business processes (legacy Microsoft Office, cloud-based Office 365, Exchange, SharePoint, Skype, LinkedIn, Dynamics), intelligence cloud (infrastructure- and platform-as-a-service offerings Azure, Windows Server OS, SQL Server), and more personal computing (Windows Client, Xbox, Bing search, display advertising, and Surface laptops, tablets, and desktops).
85GF Score
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