Microsoft’s (NASDAQ: MSFT) stock technical indicators are signaling potential further declines as the company faces bearish market pressure, particularly in the wake of its Q3 earnings report. In the most recent trading session, MSFT attempted to bounce back, ending the day nearly 1% higher at $410.37. Despite this, the stock has experienced a significant downturn, dropping almost 5% over the week.
MSFT one-day stock price chart. Source: Google Finance
Analyzing the technical landscape, MSFT has formed its first death cross since March 2022. This pattern is significant as it occurs when a stock’s 50-day moving average falls below its 200-day moving average, signaling a bearish trend.
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The last time Microsoft experienced a death cross was in March 2022, which preceded a more than 25% drop in share price over the subsequent eight months.
MSFT stock price analysis chart. Source: Barchart
**Outlook for Microsoft Stock**
This bearish trend comes during a tumultuous time for Microsoft, which is contending with increased volatility in the wake of a broader technology sector sell-off. Despite reporting earnings that exceeded expectations, investor sentiment turned sour, primarily due to the company’s cautious forward guidance.
Concerns about Microsoft’s future profitability have surged, particularly after the company announced intentions to ramp up its investments in artificial intelligence—an area where it is already heavily committed.
Adding to the negative sentiment, a stock trading analyst known as Kpak issued a warning in a post on X on November 2, indicating that Microsoft’s weekly chart has displayed a bearish breakdown, which could signify additional downside risks.
MSFT stock price analysis chart. Source: TradingView
After a two-year upward trend, the stock has closed below a crucial support trendline, accompanied by a bearish engulfing candlestick pattern. This shift suggests a change in momentum, with the stock now trading beneath the converged 5-, 9-, and 20-week exponential moving averages (EMA), reflecting increasing short-term selling pressure.
Further complicating the outlook is a possible diamond top formation—a chart pattern typically associated with a transition from a strong uptrend to a downtrend, frequently occurring at market peaks.
Conversely, financial market commentator LadeBackk has noted the fluctuating investor sentiment surrounding Microsoft. Recent data indicates that Wall Street may be adopting a less optimistic view of the tech giant for the short term. However, the analyst posits that this dip in sentiment could represent a buying opportunity. Historically viewed as one of the most reliable and stable stocks, Microsoft could be poised for impressive performance in 2025.
For instance, data shared by commentators showed that on October 31, 2024, there was notable activity in options for a $440 call contract expiring on March 21, 2025, with prices reaching a high of $16.25 and a low of $14.59.
MSFT stock contract volume. Source: Unusual Whales
This options activity may suggest a growing interest in Microsoft’s potential upside, notwithstanding the prevailing market hesitations. The analyst emphasized that the stock is well-positioned to emerge as a “darling” of the market in 2025.
**Analysts’ Perspectives on MSFT Share Price**
In light of the recent stock movements, analysts have also provided their forecasts for MSFT. According to Finbold, Karl Keirstead from UBS has maintained a ‘Buy’ rating, though he has adjusted the price target from $510 to $500.
Mark Murphy from JPMorgan (NYSE: JPM) has also expressed a bullish outlook, granting an ‘Overweight’ rating and setting a price target of $465, down from $470, based on the company’s long-term growth prospects.
These assessments come as Microsoft strives to keep its valuation above the $400 support threshold, even as some analysts project that the stock could potentially hit $500 by the end of 2024.
