Microsoft exceeds Q2 earnings expectations, driven by the strength of AI and cloud services.

FUNDAMENTAL OVERVIEW:

On Tuesday, Microsoft (MSFT) revealed its second-quarter earnings, surpassing revenue and profit expectations. The company posted adjusted earnings per share of $2.93 on revenue totaling $62 billion, outperforming projected figures of adjusted EPS at $2.78 and revenue at $61.1 billion.

Despite the positive results, investors seemed less than fully satisfied, with the stock dipping approximately 1% in premarket trading on Wednesday.

Microsoft’s crucial cloud revenue reached $33.7 billion, surpassing estimates of $32.2 billion. The Intelligent Cloud segment, encompassing the Azure service, recorded $25.8 billion, exceeding expectations of $25.3 billion. Microsoft noted that AI services contributed 6 percentage points to Azure revenue growth, up from 3 percentage points in the previous quarter.

Microsoft has profited significantly from the AI surge, propelling its shares to a 50% increase over the past year and elevating its market capitalization to over $3 trillion.

Regarding productivity, Microsoft reported revenue of $19.25 billion for Productivity and Business Processes, slightly surpassing estimates of $19.03 billion. In addition, the More Personal Computing business, encompassing sales from Windows software and the Xbox gaming division, generated $16.89 billion.

MICROSOFT TECHNICAL ANALYSIS DAILY CHART:

Technical Overview:

Microsoft is currently trading within an up channel.

Microsoft is positioned above 5&20 Moving Averages (SMA).

The Relative Strength Index (RSI) is in the Buying zone, while the Stochastic oscillator suggests a Positive trend.

Immediate Resistance level: 411.13

Immediate support level: 403.63

HOW TO TRADE MICROSOFT

Following an initial upward trend, Microsoft entered a consolidation phase before experiencing another breakout, resulting in a further upward movement. Currently, Microsoft is undergoing a slight retracement around a support zone, and if it remains above this level, the upward trajectory is expected to continue.

TRADE SUGGESTION- Limit Buy– 400.20, TAKE PROFIT AT- 413.01, SL AT- 393.01.