I’m Betting That The Post-Midterm Flight to Quality Will Kick Microsoft Into Gear Alex Sirois Mon, November 9, 2026 at 10:45 AM EST 5 min read AMZN +3.49% GOOG +1.73% MSFT +2.21% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Microsoft (MSFT) looks built for post-midterm volatility, with Azure growing 48% and a $677 billion backlog of signed future revenue.
Amazon (AMZN) and Alphabet (GOOGL) post big cloud growth, but both burned free cash, while Microsoft expects to stay free-cash-flow positive.
Capital spending is the main risk: capex roughly doubled to $39 billion, yet operating cash flow rose 29% to fund the buildout.
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Microsoft (NASDAQ:MSFT) stands out as markets react to the midterm elections. The CBOE Volatility Index rose from 16.61 on November 4 to 28.18 on November 5. When fear rises like that, investors tend to favor companies built to weather political uncertainty, and Microsoft fits that profile.
Microsoft sells infrastructure that businesses cannot switch off: cloud capacity, productivity software, security and now AI agents. Customers sign multiyear contracts for it. Political uncertainty can push money toward companies with strong balance sheets and predictable earnings, and Microsoft fits that profile. The 10-year Treasury yield has also fallen to 4.84% from a 5.31% high on October 5. Lower long-term yields make it easier for investors to pay up for high-quality growth.
1. Growth is speeding up. Microsoft is a $3.94 trillion company, and growth is still getting faster. Fiscal first-quarter revenue reached $92.28 billion, up 18.8%. Microsoft Cloud revenue hit $63.90 billion, up 30%, and Azure grew 48%. CFO Amy Hood told analysts, "Customer demand continues to exceed available supply."
2. Future revenue is already under contract. Commercial remaining performance obligations are revenue customers have signed for but Microsoft has not yet booked. That backlog rose 73% to $677.00 billion. Few companies have that much revenue committed in advance.
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3. Earnings are steady and the balance sheet is strong. Non-GAAP EPS of $4.89 beat the $4.72 estimate. That made it the 6th consecutive quarter of beating consensus. Operating margin stands at 46.78%, debt-to-equity at 0.29 and interest coverage at 50.88x. Microsoft also returned $10.2 billion to shareholders in the quarter.
AWS revenue at Amazon (NASDAQ:AMZN) grew 39%. But the stock trades at around 36 times earnings, compared with about 29 for Microsoft. Its trailing free cash flow was negative $42.4 billion.
Alphabet (NASDAQ:GOOGL) looks cheaper at about 13 times earnings, and Google Cloud grew 103%. Still, third-quarter free cash flow came in at negative $9.065 billion. Alphabet also sold shares through a stock offering program and has $27.6 billion of capacity left to sell more, which could dilute existing shareholders. Microsoft expects to remain free-cash-flow positive in FY 2027. That cash-generation gap is a key advantage for long-term investors.
My main concern is capital spending. Capital expenditures rose to $39.37 billion, up 102.99%. Fiscal 2026 free cash flow fell 6.46% to $66.99 billion. Third-party capacity that Microsoft expected has been delayed to into the second half of the fiscal year. If AI demand cools, Microsoft will have spent heavily on capacity it doesn't need.
Two factors offset that risk. Operating cash flow rose 28.73% to $58.00 billion, so the business is generating plenty of cash to fund the expansion. And the $677 billion backlog shows much of that new capacity already has buyers. The capex story extends well beyond Microsoft, of course, and we rounded up seven companies providing the power, cooling and networking behind the AI expansion in a free report here.
For the current quarter, management expects Azure growth of 49% to 50% in constant currency and total revenue of $96 billion to $97.1 billion. Copilot daily users are up over 5x year-over-year. Of the analysts covering the stock, 40 rate it a buy, 12 a strong buy and zero a sell. Over the past decade, the shares returned 888.16%.
When markets get nervous, investors look for quality, and Microsoft's backlog, margins and cash generation put it near the top of that list. Keep an eye on Azure growth and capital spending in the next earnings report.
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