Microsoft (NASDAQ: MSFT) stock just did something that should be a warning sign for investors. It recently reported its first-quarter fiscal year 2025 (ending Sept. 30) results, and the stock dropped despite beating expectations.

That's never a good sign, and whenever you see it, it should prompt you to investigate further. While a stock dropping after beating expectations is never good, there's another warning sign Microsoft is exhibiting, and it could spell further trouble ahead.

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Microsoft's guidance for the next quarter was weak

In the first quarter, Microsoft reported earnings of $3.30 per share, while analysts only expected $3.10. This came on the back of 16% revenue growth, which is impressive considering Microsoft's size.

However, one issue Wall Street had with Microsoft's quarter was its guidance, which was soft. For Q2, the company is expecting only 11% revenue growth. While that's still double digits, it doesn't match up well with Microsoft's valuation.

Microsoft is one of the most expensive big tech stocks, yet it isn't growing as quickly as some of its peers. Microsoft now trades for 31.5 times forward earnings, a hefty premium for any stock.

When you compare that valuation to some of Microsoft's peers, the investment thesis for the stock starts to break down.

There are far better options than Microsoft

Let's look at some other big tech companies and their valuations. Some of the obvious comparisons are Microsoft's "Magnificent Seven" companions, and nearly all of them (except for Nvidia) reported earnings for the most recent quarter.

Data source: YCharts. Note: Q3 is for the quarter encompassing July through September; each company may have a different FY quarter.

Microsoft and Apple gather fairly hefty premiums despite putting up not very good results. This could become an issue for both companies, as they need to put up market-crushing results if they are going to trade at a significant premium to the market (the S&P 500 trades for 23.8 times forward earnings).

Microsoft's next quarter isn't expected to be anything special. Wall Street analysts don't expect its full-year results to change, either. For FY 2025, Wall Street analysts expect 14% revenue growth and earnings per share (EPS) growth of 10%. So, with Microsoft expected to put up fairly bland results for FY 2025, don't be surprised if its valuation ticks down throughout the year, putting negative pressure on the stock.