Microsoft (MSFT) Shares Decline Despite Strong Earnings Report

On 9 October, our analysis of Microsoft (MSFT) suggested that the stock price:

→ Was forming an ascending channel (shown in blue on the chart);
→ Could see a rebound from its lower boundary (indicated by an arrow).

Since then, the price indeed moved upward from this support around the $411 level, even surpassing $437. However, following Microsoft’s Q3 earnings report released post-market yesterday, the share price faced heightened volatility.

In the Q3 report:

→ Earnings per share (EPS) came in at $3.30, exceeding the expected $3.10;
→ Gross revenue was $65.58 billion, also above the forecasted $64.57 billion.

Despite these positive figures, MSFT shares saw a decline due to high volatility during after-hours trading, reaching $444 at one point and then falling to around $410. This drop may be due to Microsoft’s rising expenses. As reported by The Wall Street Journal, Microsoft’s capital expenditures in 2024 have hit $53 billion (about 28% of revenue), a substantial increase from the 12% average of revenue allocated to capital costs between 2014 and 2023.

As of pre-market trading today, MSFT is trading around $417 (approximately -4% from yesterday’s close), likely setting the opening level for today’s main session.

Today’s technical analysis of MSFT suggests that the opening may see a bearish gap, potentially pushing MSFT’s price toward the lower boundary of the ascending blue channel, where a new consensus between buyers and sellers could emerge. This sets up two scenarios:

→ Bulls may see an opportunity for another rebound;
→ Bears could aim for a breakdown of this key support level, with potential testing of the psychological $400 level.

Analyst sentiment remains positive. According to TipRanks surveys:

→ 27 out of 30 analysts recommend buying MSFT shares;
→ The average 12-month target price for MSFT is $503.