Microsoft Corporation (MSFT)vs Meta Platforms, Inc. (META)

Quick verdict

Microsoft sells the plumbing and tools of corporate computing — Azure capacity, Microsoft 365 seats, Windows, GitHub — and is paid mostly through contracts and subscriptions. Meta sells attention, monetising Facebook, Instagram and WhatsApp almost entirely through advertising auctions that flex with marketing budgets. That distinction shapes everything below: one revenue line follows enterprise IT commitments, the other follows the ad cycle. On the numbers to 30 June 2026, Microsoft turned over $331.8bn against Meta's $228.2bn, with net income of $133.7bn versus $68.1bn, and earns the higher returns (ROIC 27.1% against 20.53%) and the larger dividend (0.73% yield versus 0.34%). Meta is cheaper on every headline multiple and has compounded revenue faster. Our factor scores finish level at 3-3, both tagged high-quality: Meta takes valuation and growth, Microsoft takes quality and income, and the balance sheet is too close to separate.

At-a-glance comparison

Business model and revenue mix

Two quite different exposures sit behind these tickers. Microsoft, classified in Technology and Software—Infrastructure, spans cloud infrastructure, productivity software, the Windows franchise, LinkedIn, GitHub and Xbox — a spread of enterprise contracts, consumer licences and gaming. Its fiscal year ends in June, and the figures here are the full year to 30 June 2026. Meta sits in Communication Services and Internet Content & Information, running Facebook, Instagram, WhatsApp and Messenger, with almost all revenue from advertising and a hardware arm in Reality Labs. Its fiscal year ends in December, so its figures are trailing twelve months to 30 June 2026 — the latest fiscal year plus year-to-date. Scale differs markedly: Microsoft's $331.8bn of revenue is roughly half again Meta's $228.2bn, and its market capitalisation of $3,710.5bn is more than twice Meta's $1,582.6bn at the 4 September 2026 close.

Valuation

On price, Meta takes this factor and does so consistently rather than on one flattering ratio. At the 4 September 2026 close, Meta traded at 23.23 times trailing earnings, 6.93 times sales, 6.06 times book and 15.05 times EV/EBITDA, against Microsoft's 27.84, 11.18, 8.39 and 19.2 respectively. The gap is widest on sales, reflecting Microsoft's premium per dollar of turnover. Free cash flow tells the same story: a 2.59% yield on Meta's $41.0bn of trailing free cash flow versus 1.81% on Microsoft's $67.0bn. Adjusting for growth, Meta's PEG of 0.58 is less than half Microsoft's 1.22 — though PEG inherits whatever distortion sits in the underlying earnings growth rate, and Meta's does start from a weak 2022 base. Investors are paying up for Microsoft's mix; the discount on Meta is real but not unexplained.

Growth profile

Faster compounding belongs to Meta on both horizons available. Revenue grew at a 19.89% annual rate from fiscal 2022 to fiscal 2025 and 18.51% from fiscal 2020, ahead of Microsoft's 16.12% from fiscal 2023 to fiscal 2026 and 14.57% from fiscal 2021. Note that the two sets of periods are not aligned, since the fiscal calendars differ. On earnings, Meta's 39.84% three-year EPS CAGR looks emphatic, but fiscal 2022 was a depressed profit year for the company, so that figure is flattered by its starting point; the five-year rate of 18.41% is the steadier read and sits only marginally above Microsoft's 17.40%. Microsoft's own three-year EPS growth of 22.86% comes off a less unusual base. The verdict goes to Meta, with the caveat that the headline earnings figure overstates the gap.

Profitability and quality

Margin structure diverges in an instructive way. Meta converts 81.75% of revenue into gross profit against Microsoft's 67.94% — advertising delivery costs less than running data centres for third parties and shipping consoles. Yet Microsoft keeps more of it: a 46.78% operating margin and 40.31% net margin, versus 38.08% and 29.84%, implying Meta spends far more heavily below the gross line, consistent with its research and Reality Labs commitments. Both report an operating-income line directly, so no approximation is needed. On capital efficiency Microsoft leads on both measures, with ROIC of 27.1% against 20.53% and ROE of 34.04% against 29.85%; ROIC is the more useful of the pair here because both companies buy back stock, which shrinks the equity denominator. In absolute terms, Microsoft's operating profit of $155.2bn exceeds Meta's $86.9bn.

Balance-sheet risk

Neither company is meaningfully constrained, which is why this factor is a tie rather than a narrow win. Microsoft held $20.9bn of cash against $40.3bn of total debt at 30 June 2026, leaving net debt at just 0.1 times EBITDA. Meta held $15.5bn of cash against $83.7bn of debt, a heavier gross load but still only 0.62 times EBITDA — comfortable by any conventional standard. Interest cover is enormous on both sides, at 50.88 times for Microsoft and 43.64 times for Meta. Liquidity favours Meta, whose current ratio of 2.23 is nearly twice Microsoft's 1.23, though a sub-1.5 current ratio matters little for a business generating $67.0bn of annual free cash flow and carrying deferred revenue in current liabilities. Different shapes, same conclusion: leverage is not the deciding variable in this pair.

Price performance and shareholder returns

Shareholder distributions are modest at both, but Microsoft is clearly the larger payer. It yielded 0.73% at the September 2026 price, having paid $3.64 per share over the year to June 2026, and distributed 19.77% of earnings — leaving considerable headroom. Meta yielded 0.34% on $2.10 per share with a payout ratio of just 7.88%, reflecting a dividend only recently established relative to its earnings base. Buyback yields are slim on both counts, 0.6% for Microsoft and 0.21% for Meta, so repurchases are not the dominant use of cash at either. On a $499.70 share price Microsoft returns more cash per dollar invested; on income grounds the factor goes to Microsoft. Neither, however, is a yield proposition: the bulk of earnings at both companies is retained and reinvested.

Which stock fits which investor

The scores split rather than converge. A value-oriented buyer is pointed towards Meta, which is cheaper on earnings, sales, book, EV/EBITDA and free cash flow yield simultaneously. Growth-focused investors also lean Meta, given 19.89% and 18.51% revenue CAGRs, while accepting that the 39.84% three-year EPS rate reflects a low 2022 starting point. Those prioritising business quality have the stronger case for Microsoft: 27.1% ROIC, a 46.78% operating margin and a 40.31% net margin are the best figures in the pair. Income seekers, within modest absolute terms, also favour Microsoft's 0.73% yield and 19.77% payout. Overall the comparison finishes 3-3 and momentum too is scored a tie, so the honest conclusion is that this is a choice between exposures — enterprise software and cloud versus digital advertising — not between a winner and a loser.

• Value: META
• Growth: META
• Income: MSFT
• Quality: MSFT

Frequently asked questions

Which stock is cheaper, MSFT or META?

Meta, on every headline measure available at the 4 September 2026 close: 23.23 times trailing earnings versus 27.84 for Microsoft, 6.93 times sales versus 11.18, 6.06 times book versus 8.39, and 15.05 times EV/EBITDA versus 19.2. Its free cash flow yield of 2.59% also exceeds Microsoft's 1.81%.

Is Meta's 39.84% EPS growth rate reliable?

Treat it with care. That three-year compound rate runs from fiscal 2022 to fiscal 2025, and fiscal 2022 was a depressed earnings year for Meta, so the figure is flattered by its base. The five-year rate of 18.41% from fiscal 2020 is the steadier read and sits close to Microsoft's 17.40%.

Which company is more profitable?

It depends on where you look. Meta has the higher gross margin at 81.75% against Microsoft's 67.94%, but Microsoft keeps more of each dollar further down, with a 46.78% operating margin and 40.31% net margin versus Meta's 38.08% and 29.84%. Microsoft also leads on ROIC, 27.1% against 20.53%.

Which pays the better dividend?

Microsoft. It yielded 0.73% on $3.64 per share paid over the year to June 2026, with a 19.77% payout ratio. Meta yielded 0.34% on $2.10 per share and paid out just 7.88% of earnings. Both are low-yield holdings, with buyback yields of 0.6% and 0.21% respectively.

Does either company carry risky levels of debt?

Neither, on these figures. Microsoft's net debt was 0.1 times EBITDA at 30 June 2026 with interest cover of 50.88 times; Meta's was 0.62 times with cover of 43.64 times. Meta carries more gross debt at $83.7bn versus $40.3bn, but also the stronger current ratio at 2.23 against 1.23.

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