According to the Microsoft (MSFT) chart, yesterday’s close fell beneath $460, marking the lowest level since early June last year. The share price has dropped more than 16% from its all-time high around $550.
Factors Behind MSFT’s Decline
The pullback appears to reflect a shift in market sentiment: investors are moving away from AI-driven optimism towards a more realistic assessment of the company’s investment returns. Profit-taking is underway, amid concerns that current spending on infrastructure may not deliver immediate gains.
Additional pressures include reports highlighting:
→ weaker-than-expected sales of AI products, such as Microsoft 365 Copilot;
→ rising competition from rivals, including Google Gemini and Amazon AWS;
→ significant capital expenditure, projected to exceed $80 billion annually.
Technical Perspective on MSFT
Over the longer term, MSFT shares continue to trade within a well-defined upward channel:
→ the lower boundary acted as support back in April 2025;
→ the upper boundary has repeatedly served as resistance, with the orange arrows highlighting strong selling whenever prices breach this level. The black arrow points to increased volume during the early November sell-off, a bearish signal following overbought conditions;
→ the QH line, dividing the upper half of the channel, has shifted from support to resistance around the key $500 mark;
→ currently, the price has approached the channel’s median, where supply and demand typically balance (indicated by the blue arrow).
Given these factors, the market may settle into a temporary balance ahead of the quarterly earnings release on 28 January, which is likely to influence the next major move in the stock.
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