Key Takeaways
- Microsoft rose 7% to a record after Democrats swept Congress in Tuesday’s midterms, and Amazon rallied too.
- Fears of a slower AI data-center build-out hit CoreWeave instead.
- Microsoft still pays for its build-out from its own cash, while Amazon’s free cash flow has turned negative.
- If the build-out slows, Microsoft looks like the safest megacap to own.
Microsoft (MSFT) jumped 7% to a record this morning after Democrats swept the House and Senate in Tuesday’s midterms. Apple hit an all-time high, and Amazon (AMZN) is up 7%.
But CoreWeave (CRWV) fell 9%, even though it counts Microsoft as a major customer. Investors worry a Democratic Congress could slow new data centers, and voters in at least 14 Ohio towns approved limits on them, including 10 outright bans.
Microsoft pays its own way
That split makes sense to me. Analysts expect Microsoft’s normalized EPS to climb from $17.28 in fiscal 2026 (the year ended June) to $24.18 in fiscal 2028:
Tuesday’s vote doesn’t touch that, and Azure’s 48% growth last quarter, ahead of guidance, gave analysts no reason to cut.
The bigger edge is cash. Microsoft’s cash from operations has stayed ahead of its capex every quarter for two years:
That’s about $60 billion of free cash flow over the twelve months to September, and of the five biggest AI spenders, only Microsoft’s was positive in the September quarter.
TIKR tracks 57 analysts on Microsoft. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Microsoft, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Microsoft’s Analyst Ratings
Who needs the build-out more
Amazon does. AWS grew 39% last quarter, and CEO Andy Jassy pointed to “projected revenue growth rates of over 40% both in 2027 and in 2028.” Paying for that turned Amazon’s free cash flow into a $42.4 billion outflow over the twelve months to September.
CoreWeave guided third-quarter interest expense of $860 million to $940 million against adjusted operating income of $200 million to $260 million, so it needs customers adding capacity. Its Nov. 10 report will show whether they still are.
Constellation Energy (CEG) dropped 7%, and that looks overdone to me. Its Crane restart for Microsoft is already contracted and aimed at 2027, and bans like Ohio’s go after new data centers. It reports Nov. 9.
Still cheaper than usual
Microsoft’s forward P/E was 25x at Tuesday’s close, below its five-year average of 29x:
Today’s jump only takes it to about 26x.
Bottom line: if Congress does slow the build-out, I want the company paying for it out of its own cash, and that’s Microsoft.
Of course, its free cash flow fell to $18.6 billion last quarter from $25.7 billion a year earlier, and CFO Amy Hood guided capex above $50 billion for this one. Microsoft’s late-January report will show whether it stays positive.
So what is Microsoft stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
