Microsoft Shares Showing Signs Of A Price Low

Microsoft (MSFT) releases its latest earnings results in a busy earnings calendar for tech firms on Tuesday.

Traders will be looking at Microsoft as a benchmark for the week ahead. Strong earnings could boost the Nasdaq this week, especially after the 10,000 cuts in headcount.

MSFT – Weekly Chart

MSFT – Weekly Chart

The share price of MSFT is trading at support and has the potential for a price low here. The stock trades at $240, and this week could see it target the $260 level.

“Tech is driving a lot of the overall earnings recession that we’re seeing in the S&P,” said Michael Casper, an equity strategist at Bloomberg. “While there’s a lot baked in, depending on if this recession does emerge and how badly it occurs, there is certainly some negative revision risk for the sector still.”

Fourth-quarter earnings for tech firms in the Nasdaq are expected to drop 9.2% from a year ago, which would be the sharpest drop since 2016. Three months earlier, analysts were predicting flat earnings.

“Tech isn’t suffering from an industry demand issue, it’s suffering more from a digestion of the excesses that were built in during the pandemic,” said an analyst at Value Point Capital. “There’s money on the sidelines that is waiting to be put back into the sector.”

For the fiscal second quarter, Microsoft expects to take a hit from its Azure cloud segment, with revenues to increase between 22% and 24% to $21.25-$21.55 billion. Microsoft warned that revenue growth from its Azure business would slow by 5 percentage points in the second quarter. That segment has been a significant driver of the company’s growth over the last year.

A stronger-than-expected earnings report would fuel a rally in Microsoft this week, which could set up further gains for the stock in Q1.

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