This could be a key moment for anyone interested in buying Microsoft stock.
Microsoft (MSFT 11.89%) is one of the major players in an industry poised to deliver explosive growth in the coming years: artificial intelligence (AI). In fact, this tech giant has already been benefiting from AI as it offers something customers need a lot of these days — capacity for AI workloads.
In recent quarters, this has resulted in growth for Microsoft Azure, the company’s cloud business, as it offers AI infrastructure. And in the company’s latest quarterly earnings report, delivered just this week, this positive message continued. Microsoft Azure and other cloud revenue surged 39% in the period, and chief executive officer Satya Nadella said, “we are only at the beginning phases of AI diffusion.” So there may be a lot more growth to come.
Meanwhile, Microsoft’s stock hasn’t reflected this optimism in recent weeks — in fact, it recently did something it hasn’t done in a year. Let’s check it out and see what may happen next.
Image source: Getty Images.
Fundamentals vs technical analysis
First, it’s important to note that there are various ways to look at a stock’s performance and consider what’s ahead. One of those is by looking at fundamentals such as earnings reports and financial health. Another is technical analysis, which considers certain price, volume, and other trading patterns and how they’ve impacted performance in the past.
Considering fundamentals is the best way for investors to understand whether a stock is a solid long-term bet. But every once in a while, you may also look at a technical analysis pattern for an idea of what a stock might do in the days or weeks to come.
Today’s Change
(-11.89%) $-57.25
Current Price
$424.38
Key Data Points
Market Cap
$3.6T
Day’s Range
$421.04 – $442.46
52wk Range
$344.79 – $555.45
Volume
3.5M
Avg Vol
26M
Gross Margin
68.76%
Dividend Yield
0.71%
And this brings me to the move Microsoft recently made. The stock formed a death cross, something that happens when its short-term moving average crosses under its long-term moving average. The last time Microsoft stock did this was last spring.
MSFT 50-Day Simple Moving Average data by YCharts
A bearish pattern
Generally, when this happens, it suggests a bearish pattern, and that means additional declines may follow. Now, does this mean you should avoid Microsoft stock? Not at all. In fact, you may even use this as a buying opportunity, considering the tech giant’s solid long-term outlook. By investing on the dip, you’ll get in on the stock at a lower valuation.
MSFT PE Ratio (Forward) data by YCharts
It’s also important to point out that a technical pattern such as this one may easily be interrupted by positive news from the company or industry. And the declines following a death cross aren’t necessarily long-lasting.
All of this means that this technical analysis move that may look ominous actually represents a good time to get in on a quality long-term market giant — and this time it’s potential AI winner, Microsoft.
