Microsoft Shares Drop After Cloud Revenue Misses Estimates
Microsoft (MSFT) shares tumbled nearly 3% in Tuesday’s extended trading session after the tech giant reported better-than-expected quarterly results but missed Wall Street’s revenue estimate for its cloud segment, a business that brings in around 44% of the company’s total sales.
The earnings-driven drop comes after Microsoft shares have fallen nearly 10% from their record close set on July 5, pressured by a broad sell-off in technology stocks and a global IT outage earlier this month caused by an erroneous software update by cybersecurity firm CrowdStrike (CRWD) that triggered widespread disruptions.
Volume Increases Leading into Earnings
Since bottoming out in November 2022, Microsoft shares have trended steadily higher, with momentum accelerating following the 50-day moving average (MA) crossing the 200-day MA in March last year to form a golden cross pattern.
However, more recently, the shares continue to retrace from their all-time high (ATH) set earlier this month and have fallen below the 50-day MA leading into the tech behemoth’s quarterly report. Importantly, volume has increased over the past week, indicating that investors have positioned for post-earnings volatility.
Monitor These Levels Amid Post-Earnings Fall
Amid earnings-related selling, market participants should monitor four key chart levels where Microsoft shares could encounter support.
Firstly, it’s worth watching if buyers can defend the $410 area, which currently sits near Wednesday’s expected opening price. Positioned less than 2% above the rising 200-day MA, this level could find support from a horizontal line linking a series of similar trading levels between late January and early June.
An inability to hold the above level could see the shares decline to $385, a location on the chart where they may attract buyers near the November 2023 swing high, which also aligns with the low of a minor pullback in January this year.
Ongoing selling may spark a fall to $367, where the price could encounter support from a trendline connecting the July 2023 swing high and a narrow trading range between December and January that formed as part of the stock’s longer-term uptrend.
Finally, a more bearish move could see the shares test lower support around $340, a location on the chart likely to garner significant buying interest near multiple price peaks between November 2021 and September last year.
Microsoft shares fell 2.7% to $411.40 in after-hours trading Tuesday.
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