Microsoft (MSFT) just threw its own hat into the ring by unveiling two homegrown AI models, MAI-Voice-1 and MAI-1 Preview. What is striking is that the company has previously leaned on OpenAI’s technology for Copilot and other platforms, but this launch signals a bold step toward developing its own foundation models. Both MAI-Voice-1 and MAI-1 Preview are engineered for efficiency, and Microsoft did not waste time putting them to work; Copilot users are already getting a taste. For investors, this pivot to proprietary AI not only underscores Microsoft’s expanding ambitions in artificial intelligence, it also hints at a long-term vision of controlling its technological future.
This high-profile shift comes amid a year of impressive growth for Microsoft’s stock, which is up 24% over the past year and nearly 19% so far in 2025. The momentum extends beyond product launches, with strategic collaborations such as embedding agentic AI in OMV Energy’s drilling operations and integrating advanced models into client platforms like Hebbia’s Matrix. These moves have kept sentiment around Microsoft buoyant, suggesting a market that remains confident about the company’s direction.
After a steady climb and a flurry of AI-driven news, some investors may be wondering whether Microsoft’s valuation is now too high for further upside or if this wave of innovation indicates opportunities others might be overlooking.
According to the most widely followed narrative, Microsoft is considered overvalued by 17% compared to its estimated fair value over the next five years.
“Revenue Growth: 10 to 13% CAGR (driven by Azure, AI, and gaming). Profit Margin Expansion: Net margin to rise from approximately 35% to approximately 40%, due to higher-margin AI services and operational efficiencies. Future P/E: Current is 35x. Expected to be 30 to 35x, reflecting Microsoft’s high-growth AI and cloud positioning.”
Wondering what powers this aggressive valuation? There is a fascinating story behind the profit engine, margin improvements, and bold future earnings assumptions that fuel these forecasts. What is the linchpin holding this entire growth narrative together? Dive in to discover the key metrics that could define Microsoft’s future market value.
Result: Fair Value of $423.14 (OVERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, intensifying AI competition and potential regulatory challenges could quickly alter Microsoft’s growth trajectory and valuation outlook.
About the Author
