Not Alphabet. Not Amazon. Microsoft Trades At Big Tech&#0…

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Microsoft has had a lackluster 2026

First, let’s look at how relatively cheap Microsoft is. There are many ways to value stocks, but the most common way to value big tech players is by their price-to-earnings ratios. However, that isn’t as useful a metric for Amazon and Alphabet right now because they have recently been enjoying huge gains on their investments in other companies. Even if they don’t sell those s and lock in those gains, they still have to report the price increases as profits. As a result, their earnings per (EPS) metrics are out of whack.

To factor those non-business-related gains out of the calculation, investors can look at a line item a bit further up the financial statement: operating earnings.

From a price-to-operating-earnings standpoint, Microsoft is notably cheaper than Amazon or Alphabet. Apple is meaningfully more expensive than all three.

GOOG Operating PE Ratio data by YCharts.

Why does Microsoft trade at a discount to its peers? It all has to do with how each company is approaching AI.

The market has mixed opinions on AI

Apple really hasn’t done much with AI compared to its peers. That could wind up looking a genius strategy in retrospect, or it could prove a costly mistake. Apple has made a habit of arriving late to the party when new technologies are being developed, but when it finally does show up, it frequently brings a nearly perfect product.

AI technology may not have reached the point where Apple wants to deploy it on a widespread basis, which could be why it’s being patient. Regardless, Apple’s lack of AI participation, and in particular its decision not to build a massive fleet of AI data centers, has made its stock a haven for those who are wary of the AI bubble, so it has become quite popular from that perspective.

Apple Stock Quote

NASDAQ: AAPL

Apple

Premium Feature

Moneyball Superscore

87/100

Today’s Change

(-1.11%) $-3.78

Current Price

$336.64

Key Data Points

Market Cap

$5.0TMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.

Day’s Range

$330.70 – $338.61

52wk Range

$243.42 – $345.34

Volume

37.9M

Avg Vol

45.1M

Gross Margin

48.65%

Dividend Yield

0.31%

On the flip side, Alphabet and Amazon have gone all-in. They are spending every penny they can get their hands on to build more AI data centers for their cloud computing units. They see huge demand for cloud computing and are spending heavily to capture it. As a result, these two stocks have become attractive picks for investors who are bullish about AI.

Microsoft Stock Quote

NASDAQ: MSFT

Microsoft

Premium Feature

Moneyball Superscore

92/100

Today’s Change

(2.38%) $12.46

Current Price

$535.07

Key Data Points

Market Cap

$4.0TMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.

Day’s Range

$526.24 – $537.22

52wk Range

$349.20 – $553.72

Volume

18.5M

Avg Vol

27.5M

Gross Margin

67.94%

Dividend Yield

0.68%

Left in the middle is Microsoft. Microsoft, too, is spending heavily on AI, but not to quite the same degree as Amazon or Alphabet. Microsoft has budgeted for around $175 billion in capital expenditures this year, while Alphabet’s and Amazon’s capex bills will each top $200 billion. The market views Microsoft as not being all-in on AI, so it’s not as bullish on its prospects. Furthermore, Microsoft’s flagship AI product, Copilot, consistently lags the competition in AI proficiency scores. If it invests billions into an inferior product that fails, it will be an investment bust as well.

So, Microsoft’s cheaper valuation stems from it not being as committed to AI as its peers. The market wants to see an all-in or all-out approach, and with Microsoft taking a more middle-ground approach, it’s not as popular an investment.