Azure Grew 48%, Yet Griffin Securities Downgraded Microsoft (MSFT). Here’s the Catch Farooq Thu, November 12, 2026 at 5:34 PM EST 4 min read MSFT +0.10% Trade MSFT 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.
We just published a list of the 10 Unrivaled Stocks to Buy for the Next Decade and Microsoft (NASDAQ:MSFT) ranked 7th on this list.
Wall Street had its worst day since April 2025 last Thursday. The Nasdaq Composite fell 5.5%, the S&P 500 dropped 4.4%, and the Philadelphia Semiconductor Index plunged 12.2%.
Two worries drove the selling. Investors doubt that heavy spending on artificial intelligence will pay off, and candidates who ran against data center expansion won races in Texas and Georgia in the midterm elections. Mark Hackett, chief market strategist at Nationwide, told Reuters that chip stocks are a volatile, cyclical group in which "when sentiment shifts, the reactions are intense." Hedge funds, he added, had been selling for weeks.
A rout like that tests which businesses can protect their profits when investors lose their nerve. An economic moat is a company's lasting edge over its rivals, the kind that guards its market share and earnings.
Moats come in several forms. A company can be the low-cost producer, own a brand that lets it charge more, or hold patents and licenses that keep copycats out. Scale helps, because large producers spread their costs over more units. High switching costs make customers think twice before moving to a rival. What matters most is how long the advantage lasts and how much it depends on the people running the company.
You might also be interested in our ranking of the 10 Best Semiconductor Stocks to Buy for the Next Decade, the group that took the heaviest hit.
Stocks have bounced since. The S&P 500 and the Nasdaq each climbed more than 1% on Wednesday, and the semiconductor index jumped 7%. Equities have whipsawed all week, though, as worries about slower data center deployment and higher interest rates compete with the urge to buy the dip, Reuters reported.
Brokerages including Morgan Stanley and UBS have called the rout overdone. Morgan Stanley said the likely effect is a push-out of some data center projects from 2028 to 2029, not a derailing of the spending boom. Goldman Sachs estimates that about 45% of planned US data center capacity faces possible restrictions. Our list of the 10 Fastest-Growing AI Stocks to Buy Now covers more of the names caught up in that debate.
Strategists at Yardeni Research wrote in a Friday note that the backlash against data centers and other constraints are "speed bumps, not roadblocks." They argue that Wall Street is pricing in the roadblocks. Bank of America Global Research analysts said investors bought into last week's selloff, with institutional clients leading the purchases.
Microsoft made it to our list because it has an average upside potential of 19% and a market cap of $3.99 trillion.
Azure grew 48% last quarter, up from 42% the quarter before, which shows Microsoft's cloud business is still speeding up. Commercial bookings still waiting to be recognized rose 73% to $677 billion, so much of the coming demand is already under contract.
The question is what it costs to serve that demand. Griffin Securities downgraded the stock to Neutral from Buy on October 29, a day after the quarterly report, reportedly because heavy capital spending and a debt-funded AI buildout are weighing on cloud gross margins. Spending on data centers keeps climbing, and free cash flow fell by more than a quarter in the latest period as leases and construction costs added up. Investors are asking whether AI revenue will turn into enough profit.
Microsoft sells Windows, Office and the Azure cloud, and its moat is how deeply businesses build their daily work around all three. Leaving is expensive and disruptive. Supporters see the spending as chasing orders already signed. Whether profit can grow before costs catch up is the question in Microsoft (MSFT) Built a $100B Azure. Can It Outrun Its Own Spending?
While we acknowledge the risk and potential of MSFT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
READ NEXT: Does Micron (MU) Have an Economic Moat at All? and Jim Cramer and Ken Fisher's AI Pick: Microsoft (MSFT)
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