SpaceX, the rocket company founded by Elon Musk, went public in June and quickly became one of the most closely watched listings of the year. Investors pushed the shares as high as $225 in the weeks after the debut. The enthusiasm has since faded: the stock closed at $158.96 on Oct. 2, down 29% from its peak.
Even after that pullback, SpaceX commands a market value of $2.1 trillion. Against trailing 12-month revenue of $23 billion, that works out to a price-to-sales ratio of 94 — about 14 times the multiple on the tech-heavy Nasdaq-100. It is that valuation, rather than the business itself, that puts Microsoft (MSFT) in the frame as the more attractive entry.
By conventional earnings metrics, Microsoft trades at a measurable discount. Based on fiscal 2026 earnings of $17.95 per share — the year ended June 30 — the stock is valued at roughly 28.8 times earnings, below its five-year average of 32 and beneath the Nasdaq-100’s 34.7. Its price-to-sales ratio of 11.6 is richer than the index’s 6.5, but only about an eighth of SpaceX’s.
The earnings power behind that multiple is still compounding. Microsoft posted fiscal 2026 revenue of $331.8 billion, up 18% from a year earlier. Per-share earnings rose to $17.95 from $11.80 in fiscal 2024, a 32% jump in the latest year that included gains on the company’s OpenAI investment; excluding that contribution, adjusted EPS still grew 22%. Because profits have outrun the share price, the valuation multiple has compressed from about 36 times earnings at the end of 2024 to roughly 29 today.
The growth case rests on enterprise artificial intelligence, where Microsoft is monetizing two franchises at once. Its Copilot assistant is embedded at no extra cost in Windows, Bing and Edge, while enterprises can pay a monthly fee to run it across Word, Excel, PowerPoint and Outlook through Microsoft 365. As of June 30, companies were paying for 30 million Copilot for 365 seats, a 50% increase from just three months earlier. That is a fraction of the roughly 400 million enterprise 365 seats worldwide.
On the infrastructure side, Azure supplies the compute, foundation models from partners including OpenAI and the Foundry platform for managing AI agents. Microsoft had a backlog of $678 billion in customer orders waiting on new data-center capacity as of June 30. The company answered by building 88 new data centers in fiscal 2026 as part of a two-year plan to double its global infrastructure footprint. Azure’s annual revenue topped $100 billion for the first time in fiscal 2026, and growth accelerated to 43% in the fourth quarter.
That installed base is a structural advantage over pure AI rivals such as OpenAI and Anthropic, which must build enterprise sales from scratch. Microsoft already reaches 400 million 365 subscribers and 1.6 billion monthly active Windows devices, allowing it to sell AI upgrades with minimal customer-acquisition cost.
Where the debate gets trickier is the recent price action. Including reinvested dividends, Microsoft returned roughly 13% in 2024 and 16% in 2025, against total returns of about 25% and 18% for the S&P 500. This year is tracking similarly: the stock is up about 9% so far versus roughly 15% for the index, even after an almost 50% rally from its late-June close near $353. A third straight annual lag would be unusual. Since Microsoft went public in 1986, it has trailed the S&P 500 for three consecutive years only twice: from 2003 through 2005, and again from 2010 through 2012.
Each streak was followed by at least a year of outperformance. After the first, Microsoft roughly matched the index in 2006 and gained about 21% in 2007, when the S&P 500 returned about 5%. After the second, the stock jumped roughly 44% in 2013 versus 32% for the index — the same year then-CEO Steve Ballmer announced his retirement.
The size of the rebound tracked the starting valuation. At the end of 2005, Microsoft traded at about 23 times earnings. At the end of 2012, the stock sold for roughly 13 times reported earnings and under 10 times adjusted earnings.
Today’s multiple of about 29 is far richer than either of those troughs. Earnings growth near the recent pace remains a reasonable bet, but the valuation cushion that powered the 2013 surge is not there this time around. That is the core of the value argument: SpaceX offers a high-momentum story at an extreme multiple, while Microsoft offers a still-growing business at a more measured price.
