Microsoft releases its earnings this week and could confirm that a top is in place.
MSFT: Weekly Chart
Microsoft stock hit an all-time high this week above $360 and retraced back under the 2021 high. There is now potential to drop back to the $300 level.
“We believe this is one of the most important earnings weeks for the tech sector in many years,” said Wedbush analyst Dan Ives. “With tech stocks showing a robust performance through the first half of 2023, now the Street needs to see what this AI Revolution holds for the tech sector heading into the rest of 2023 and 2024.”
Investors will be looking for signs that Microsoft’s artificial intelligence investments are on track to boost earnings. It is likely that Wall Street is ahead of itself in pricing the potential for AI.
Microsoft’s Copilot platform was given a premium pricing model, but that may not boost revenue in comparison to its current valuation. The company is also incorporating AI into its other products, including Bing, GitHub, and Azure Cloud.
Earnings season started last week for the second quarter, and Microsoft will report its fourth-quarter fiscal 2023 results on July 25. Continued strength in the company’s cloud business is expected, and that has been a big supporter of the company’s rise to an all-time high.
For the recent quarter, Microsoft expects its revenue in the Productivity and Business processes segment to improve by 10% to $17.9–$18.2 billion. A slower figure and a lack of AI progress could hurt the company’s stock price.
After a big year for artificial intelligence and tech stocks, the coming earnings season could derail the big valuations if the revenue addition is seen to be slow.
