Yesterday, after the main trading session on the Nasdaq, Microsoft released its second-quarter report:
→ Earnings per share: actual = $2.95, forecast = $2.93;
→ Gross revenue: actual = $64.72 billion, forecast = $64.38 billion.

Despite key figures exceeding analyst expectations, MSFT's share price plummeted, falling below the psychological threshold of $400 in after-hours trading.

Investor disappointment may have been caused by the slowdown in growth of its cloud business and significant financial investments in AI infrastructure—a long-term investment with delayed payback.

Could the decline continue?

Today in pre-market trading, MSFT's price recovered to $411, suggesting that the initial negative reaction to the report may have been overly pessimistic. Additionally, there might have been a cascade of stop-loss liquidations below $400 and the June low around $405, which seemed "secure" when the price was above $460.

Technical analysis of MSFT’s chart shows that price action in 2024 formed an ascending blue channel. If the pre-market price doesn’t change significantly, today’s opening will be just below the channel’s lower boundary. If the RSI considered extended hours data, it might indicate exiting a deeply oversold zone (similar signals in 2024 had profit potential).

If the sharp decline followed by a strong recovery signifies the liquidation of speculators (likely given the approximately 24% rise from the start of the year to mid-July), then MSFT's price could return to the blue channel and resume growth within it (channel boundaries might need adjustment).

Wall Street analysts remain positive. According to TipRanks, the average MSFT forecast is $509.42 within 12 months (above the historical high). All 26 surveyed analysts recommend buying MSFT stock.

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