Microsoft (MSFT) shares are at a crossroads ahead of the latest earnings release.
MSFT – Weekly Chart
The price of MSFT has been rejected at the $292 level, and a bearish earnings report could see the stock fall further.
Microsoft’s earnings are expected to slow on sluggish demand for cloud services. The Redmond, Washington-based company is scheduled to release earnings of $16.7 billion, or $2.24 a share, which would be flat on the year.
Investors will be focused on the cloud services segment, but they will also be keen to see the impact of the ChatGPT product. Microsoft has committed much money to the bot and pivoted the business model there.
Microsoft CEO Satya Nadella will be expected to face questions about the future of Microsoft’s AI and the impact of the recent cost-cutting measures, where 10,000 staff were cut.
“The next major wave of computing is being born, as the Microsoft Cloud turns the world’s most advanced AI models into a new computing platform,” he said in last quarter’s earnings releases.
Microsoft (MSFT) Running Out Of Options
Microsoft extended its partnership with the ChatGPT creator OpenAI in January, investing a reported $10 billion in the company. Microsoft’s AI-enhanced search engine, Bing, has also been gaining ground on Google, with 100 million daily active users for the first time in March. However, despite the AI buzz, analysts expect search and ad revenue to grow just 4% in the last quarter, compared with the 22% growth for the previous year.
Microsoft stock touched a 14-year high recently, with a 20.40% gain for the year. The store is slightly ahead of the S&P 500 Information Technology index, which rose 20.13% in the same period.
Traders can look for a bearish earnings release for further selling. A breakout of the recent resistance would create a bullish outlook.