Microsoft Stock: Key Levels to Watch Ahead of Earnings as DeepSeek AI Shakes Markets
Microsoft (MSFT) is under the spotlight as investors await its highly anticipated earnings report. Yesterday’s market turmoil, triggered by DeepSeek AI’s disruptive model, sent shockwaves through the tech sector, wiping out approximately $500 billion from NVIDIA’s valuation as its stock plunged 17%. This ripple effect weighed on other major tech stocks, with investors reassessing their exposure to big tech ahead of earnings season.
Despite experiencing over a 6% dip during intraday trading, Microsoft shares recovered some losses by late trading and are showing resilience in pre-market activity today. At the time of writing, Microsoft shares are trading around $438.18, with traders closely watching key technical levels that could determine the stock's next move.
Key Technical Levels to Watch for Microsoft Stock
Resistance Levels:
- The upper white trendline at $450-$452 serves as the first resistance point. A decisive break above this level could pave the way for Microsoft to test its all-time high of $469.38 (orange trendline).
- If the stock surpasses its all-time high, the next major target would be the psychological resistance at $500. However, this would depend heavily on a strong earnings performance and investor sentiment.
Support Levels:
- Initial support lies within the green channel visible on technical charts.
- Further support levels to monitor include $415, $405, and the August low of $383.
- A break below $383 could push the stock lower, with the $360s becoming the next critical zone for buyers.
Technical Indicators: Bullish Bias Ahead of Earnings
Microsoft’s technical indicators currently point to a bullish outlook:
- The MACD (Moving Average Convergence Divergence) remains in positive territory, suggesting momentum is still in favour of the bulls.
- The Stochastic Oscillator is rising, indicating growing buying pressure.
However, with earnings reports looming, fundamentals are likely to outweigh technical signals, and volatility should be expected. Any disappointment in earnings or guidance could trigger a sell-off, especially given Microsoft’s already high valuations.
Earnings Outlook and Investor Sentiment
DeepSeek AI’s market disruption has highlighted the vulnerability of tech stocks to valuation concerns. Investors will be scrutinising Microsoft’s earnings report for insights into revenue growth, cloud performance, and AI-driven initiatives. A strong report could validate high valuations and drive the stock higher, while even minor disappointments could result in sharp declines.
Conclusion
Microsoft’s earnings report will be a critical event for its share price, with both bullish and bearish scenarios in play. Key levels to watch include resistance at $450-$452 and support at $383, with a potential breakout above $469 leading to the psychological $500 mark. While technical indicators signal optimism, the outcome of the earnings report will likely dictate the stock’s short-term direction. Investors should remain cautious and prepared for heightened volatility.
