Microsoft Stock Experiences First Death Cross in Over Two Years Whats Ahead
Microsoft’s (NASDAQ: MSFT) stock is currently indicating a potential for further declines as it grapples with bearish sentiment following the release of its Q3 earnings report. In the most recent trading session, MSFT made a bid for recovery, closing nearly 1% higher at $410.37. However, the recent sell-off has resulted in a nearly 5% decrease on the weekly chart.
MSFT one-day stock price chart. Source: Google Finance
From a technical perspective, MSFT has formed its first death cross since March 2022. This pattern materializes when a stock’s 50-day moving average dips below its 200-day moving average, serving as a bearish indicator.
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The last occurrence of a death cross for Microsoft was in March 2022, after which the stock price fell by over 25% in the ensuing eight months.
MSFT stock price analysis chart. Source: Barchart
### What Lies Ahead for Microsoft’s Stock
This bearish trend coincides with a tumultuous phase for Microsoft, as the stock faces heightened volatility in line with the broader technology sector downturn. Despite reporting earnings that surpassed expectations, investor sentiment soured due to the company’s forward guidance.
Concerns regarding the tech titan’s future profitability have arisen as it announced plans to ramp up investment in artificial intelligence, a sector in which it is already heavily involved. The negative outlook is exacerbated by stock analyst Kpak, who recently warned in an X post on November 2 that Microsoft’s weekly chart has shown signs of a bearish breakdown, indicating possible further declines.
MSFT stock price analysis chart. Source: TradingView
After a two-year uptrend, the stock has closed beneath a crucial support trendline, accompanied by a bearish engulfing candlestick pattern. This change suggests a shift in momentum, with the stock finishing below the converging 5-, 9-, and 20-week exponential moving averages (EMA), which points to increasing short-term selling pressure.
Additionally, a potential diamond top formation is emerging, typically signaling a shift from a strong uptrend to a downtrend, often occurring near market peaks.
Conversely, financial commentator LadeBackk observed that investor sentiment surrounding Microsoft has been fluctuating, with recent data suggesting that Wall Street may be adopting a less optimistic view of the tech giant in the near term. However, this analyst sees the current dip in sentiment as a potential buying opportunity. Historically viewed as a stable and secure stock, Microsoft could be poised for impressive performance in 2025.
For example, recent options activity for the $440 call contract expiring on March 21, 2025, showed notable movement on October 31, 2024, peaking at $16.25 and dipping to $14.59.
MSFT stock contract volume. Source: Unusual Whales
This options activity may suggest a growing interest in Microsoft’s upside potential, despite broader market skepticism. The analyst noted that the stock could emerge as a “darling” in 2025.
### Analysts’ Perspectives on MSFT Share Price
In light of recent stock movements, analysts have offered their projections for MSFT. As reported by Finbold, Karl Keirstead of UBS has retained a ‘Buy’ rating with a revised price target of $500, down from $510. Mark Murphy from JPMorgan (NYSE: JPM) shared a similarly optimistic outlook, holding an ‘Overweight’ rating based on the company’s long-term growth prospects, with a price target of $465, adjusted from $470.
These outlooks come as Microsoft strives to maintain its valuation above the $400 support threshold, although some analysts believe the stock could reach $500 by the end of 2024.
