Microsoft faces deeper correction as AI infrastructure costs weigh on shares
MSFT is trading around $520.70 on November 11, down approximately 2.4% following another wave of selling across the largest U.S. technology companies. On the 4H chart, Microsoft shares have retreated from local highs of $555–560 and fallen below their short-term moving averages, concentrated around $530–535.
534.76
548.27
Azure growth confirms strong demand for cloud services
The main fundamental factor remains Microsoft's strong results for the first quarter of fiscal 2027, released on October 28. Azure delivered particularly strong performance, with revenue up 48% year over year to $33.2 billion, while total Microsoft Cloud revenue increased 30% to $63.9 billion. Meanwhile, remaining commercial performance obligations rose 73% to $677 billion, confirming sustained corporate demand for cloud computing and AI infrastructure. For the current quarter, management forecasts an acceleration in Azure growth to 49–50% in constant currency, but warns that demand for computing capacity continues to exceed available supply.
Capital expenditures and supply risks pressure valuations
At the same time, investors are increasingly concerned about the cost of further infrastructure expansion. Microsoft's capital expenditures reached $45.2 billion in the latest quarter, with approximately three-quarters of that amount allocated to equipment with relatively short useful lives, including processors, graphics accelerators, and storage systems. The company expects investments to exceed $50 billion in the current quarter, while supply constraints for certain components will continue to limit the pace at which new capacity becomes operational.
Another source of uncertainty emerged from a Reuters report published on November 10 about Microsoft's efforts to persuade the U.S. administration to abandon a proposed ban on imports of Chinese optical transceivers for data centers. According to industry analysts, the company is building 35 data centers in the U.S. and plans another 134 facilities. Potential supply restrictions could increase equipment costs and delay the deployment of infrastructure needed to fulfill Azure's growing order backlog.
MSFT could test $500–490 after rejection at $550
As I warned, the bulls' failure to break through resistance around $550 triggered profit-taking, which has led to the current decline. As part of this correction, a test of support around $500–490, as I noted in Microsoft faces a critical test at $560 as inflation and supply risks mount, remains possible. Overall, the outlook remains constructive, but a break below the latter level would weaken the bulls' position.
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