While volatility can be a characteristic of some of the FAANG stocks, Microsoft shares have continued their post March bull run.
Microsoft revenues soar on cloud computing
Those following the Microsoft share price this year will have noted that like much of the stock market, Microsoft saw its shares dip in March as the pandemic kicked in. Indeed, on March 23 the MSFT share price reached a low of $132. However, the rise of COVID-19 has led to the rise of working from home, something which has boosted cloud computing like never before. Clearly, with no end in sight to the pandemic and fresh lockdowns looming, a Microsoft share price forecast which suggests they will be underpinned by earnings from the Cloud is likely to make sense to investors. This point is underlined by the latest report from Microsoft that revenues at its Intelligent Cloud Business were up 20% in the three months to September. This compares with an overall rise in revenue for the US tech giant of 12%, proving where the current growth driver is.
Microsoft’s well diversified business
For Microsoft shares to maintain their bull run since March, one that reached a peak at $229 in early September, and valuing the company close to $2tln, one would expect to see a strong performance across its range of businesses. While Cloud Computing is clearly the star at the moment, perhaps the more familiar divisions and services are still making their mark. While Azure, the cloud computing service led the pack with a 48% revenue gain, there were respectable gains too boost the Microsoft share price across the board. For instance, Xbox and related services soared 30%, while Office 365 Commercial revenue raked in 21%. Networking portal LinkedIn pushed ahead by 16%. Any retracements were modest, with only Windows OEM and Search Advertising down 5% and 10% respectively.
Microsoft share price opportunities
Thankfully, unlike most of its leading US tech company counterparts, the Microsoft share price is not generally the most volatile of markets. This makes it appear relatively more straightforward to forecast MSFT shares. Taking a simplistic approach, the two best opportunities to buy Microsoft in the recent past have come when the stock has dipped to the 200 day moving average. This happened in December 2018, with a sub $100 opportunity which led to $190 peak in February this year. Similarly, the March dip below the 200 day moving average below $140 led to a similar $90 upside by September.
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3. Search for Microsoft shares in the market watch or symbols window
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Microsoft share price forecast towards $250
Having peaked just below $230 in September 2020, we have seen shares of MSFT remain in a range between that area and the round $200 number. Given the way that the company has just served up a strong quarterly update, and support for Microsoft shares has been delivered on a fundamental basis, I would expect the recovery since March to continue. The view at this stage is that any dips towards the 200 day moving average at $189 currently can be regarded as technical long opportunities, much as such dips provided upside in Microsoft shares in 2018 and earlier in 2020. Above the 200 day line I would expect that Microsoft shares could hit the top of a rising trend channel drawn from mid 2019 with its resistance line pointing at $250 as a 3-4 months timeframe target.
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