Microsoft shares plunged sharply following the release of the company’s latest quarterly results on Wednesday evening. Although the figures came in well ahead of expectations, the stock recorded its steepest decline on record.
The earnings report showed:
→ Earnings per share: $4.14 versus a consensus estimate of $3.90.
→ Revenue: $81.2bn, exceeding forecasts of $80.3bn.
→ Operating income: up 21% year-on-year.
Even so, MSFT ended the following trading session down by around 10%. According to press reports, this marked the largest single-day fall in Microsoft’s share price, wiping approximately $360bn off the company’s market value.
What Triggered the Sell-Off in MSFT?
Investor sentiment appears to have turned negative for two main reasons:
→ A surge in capital spending: capital expenditure jumped 66% to $37.5bn as Microsoft continued to pour money into data centres and AI infrastructure. However, the timeline for these investments to translate into tangible returns remains unclear.
→ Signs of cooling momentum in the cloud business, raising concerns about the pace of future growth.
Technical Outlook for Microsoft Shares
In mid-January, our technical analysis highlighted a key rising channel that has defined MSFT’s long-term price action. At the time, we suggested the stock might consolidate ahead of the earnings announcement.
While price action remained volatile, shares showed renewed strength from 22 January, suggesting buyers were beginning to challenge selling pressure.
The sharp drop seen yesterday has clearly shifted the technical landscape, but two important elements stand out:
→ The price fell below the 1 May low, moving into a broad bullish gap area just above the psychological $400 mark.
→ Since the start of 2026, MSFT has been trading within a downward-sloping channel (highlighted in red), with the price now testing its lower boundary.
These factors may provide near-term support. This view is reinforced by the latest candlestick: the session closed well above its intraday low, while volumes reached their highest levels in several years. This indicates strong buying interest, lifting the price from around $422 to $433.
As a result, the initial shock reaction may subside, and MSFT could avoid a further acceleration to the downside. That said, a sustained return to a bullish trend would require clear and compelling fundamental drivers.
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