- he chart is at a "make or break" point. The orange circles show strong buying interest, but the red moving average remains a heavy ceiling.
Microsoft stock experienced a decline by 5% during the afternoon trading session. This decline is driven by Investro’s reaction to the company’s aggressive expenditure on artificial intelligence. The $190 billion ger on AI and data centers collapse the reported earnings of the 1st quarter of 2026.
The firm disclosed a revenue of $82.89 billion and earnings per share of $4.27, surpassing analysts’ expectations. The company’s overall gross margin also declined year-over-year, although the Azure cloud platform continued to grow at an accelerated pace. The company’s shares struggle at the $407 level, posting a decrease of 5% compared to the previous close.
How Does Microsoft Plan to Win Back Users?
During the earnings call, Satya Nadella, Microsoft CEO, exposed these following points:
- Microsoft is focusing on the core improvements needed to win back users and strengthen engagement.
- A key priority is reducing memory usage to improve overall system performance.
- Windows is being optimized to run more efficiently on devices with lower RAM.
- This is especially important for budget laptops and older PCs, where high memory usage affects speed.
Microsoft Technical Outlook:
Currently the price is trapped in a main downward channel (blue parallel lines). The stock has recently bounced, but it’s still making “lower highs” and “lower lows” versus its peak in 2025. The price recently rallied but was sharply rejected right at the thick red line near $421. As long as the price stays below this red line, the overall long-term trend is still considered bearish.
The “Higher Lows” highlighted by Orange Circles are where the price found support. The second circle being above the first shows buyers are becoming more aggressive and willing to step in at higher prices, creating a potential “bottoming” pattern.
Currently, the RSI is sitting at 45.99 in neutral territory. It has cooled off from its recent peak (around 70) without becoming oversold, suggesting the market is in a “wait and see” mode.
Potential Scenarios:
If the price managed to close a daily candle above the 200 MA ($421) and the horizontal resistance at $426, it would signal a trend reversal. This would break the descending channel and likely trigger a rally toward the next major target at $433.56 and eventually the psychological resistance near $553.77.
The recent bounce would be confirmed a ‘relief rally’ if the price fails to get back above the red line and falls back into the channel. This one would likely see price head back down to test the structural support in the $380 – $400 range. If it breaks below that lower orange circle, it would suggest a continuation of the downtrend towards the $360 level.
Cloud growth remains a powerhouse, with Azure growing 40% as companies rush to integrate AI into their operations. The total AI business has already surpassed an annual revenue run rate of $37 billion, which is a 123% increase compared to last year. Moreover, the rollout of Copilot continues to drive a 19% increase in Microsoft 365 commercial cloud revenue. This means that businesses are willing to pay extra for AI-native productivity tools.
