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Trends & Analysis
News

USD gains amid Fed rate cut speculations

News

Is the silver squeeze back?

News

Li Auto’s stock hits a speedbump on Q1 results

News

Gold closes week higher on rate cut speculations

News

Week Ahead Preview: 20th of May

News

Walmart’s stock hits record high on Q1 results

Asset Watch

Will the bears maul Microsoft?

Tuesday, July 25, 2023

It’s a big week of Big Tech earnings, as heavyweights like Amazon, Alphabet and Meta Platforms are set to report. And with Microsoft releasing its results after the bell on Jul. 25, the cloud-computing giant’s forward guidance will be heavily scrutinized.
Tesla and Netflix were valuation casualties last week, as sharp 2023 rallies left the stocks vulnerable to pullbacks. Both suffered material drawdowns as their earnings/guidance showed underwhelming expectations.
Microsoft announced new generative AI features for its 365 suite on Jul. 18, so investors will most likely want further details on its growth prospects. The Financial Times reported that AI subscriptions will cost 53% to 83% more, which should improve Microsoft’s revenue profile. However, if details are sparse, investors could view that as a sign of weakness.

What’s more, Microsoft confronts a do-or-die moment on the technical front. The stock ended last week near support from its 2021 highs but hasn’t gained much traction above this area. In addition, last week’s profound reversal created a shooting star candle, where a large wick gave way to a close near the lows. The pattern is bearish and often marks the end of rallies.

If Microsoft sells off like Tesla and Netflix, a buying opportunity could be present near the 20-week moving average ($312.24). The level essentially marked the bottom during every decline in 2021 and ended the March 2023 pullback.

So, will Microsoft exceed investors’ expectations, or is a correction on the horizon?


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