Microsoft (MSFT) Shares Post a Record Decline

On Wednesday, after the close of the regular trading session, Microsoft (MSFT) released its quarterly earnings report, which exceeded analysts’ expectations:

→ Earnings per share: actual $4.14, forecast $3.90;
→ Gross revenue: actual $81.2bn, forecast $80.3bn;
→ Operating profit: up 21%.

Despite the strong results, MSFT shares suffered a dramatic sell-off of around 10% by the close of yesterday’s trading. According to media reports, this was the largest one-day drop in Microsoft’s share price on record, with the company losing roughly $360bn in market capitalisation.

Why MSFT Shares Collapsed

Market participants were most likely disappointed by the following factors:

→ A sharp rise in capital expenditure: capex surged by 66% to $37.5bn as Microsoft continued to invest heavily in data centres and AI infrastructure, while the timing of meaningful returns on these investments remains uncertain.

→ Slowing growth in the cloud computing segment.

Technical Analysis of Microsoft (MSFT) Shares

When analysing the MSFT chart on 15 January, we identified a key ascending channel reflecting the stock’s long-term price structure. At that time, we suggested that the market might find a temporary balance ahead of the earnings release.

Since then, although volatility persisted, the price showed an ability to recover from 22 January onwards, indicating that buyers were attempting to wrest control from sellers.

Yesterday’s record decline significantly altered the picture, but two factors are worth noting:

1 → The price fell below the 1 May low, entering the area of a broad bullish gap located above the psychological $400 level.
2 → In 2026, the market has been forming a descending channel (shown in red), with the price now reaching its lower boundary.

It is reasonable to assume that these two factors could act as support. The structure of yesterday’s candle supports this view: the session closed well above the low, and trading volumes were the highest in several years. This suggests active buying interest, with the price rebounding from around $422 to $433.

As a result, it is possible that the initial emotional reaction may fade and MSFT shares will avoid a further acceleration of the downtrend. However, a meaningful shift back to a bullish market structure would require strong fundamental catalysts.

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