Microsoft stock is holding firm despite market volatility as investors look ahead to Microsoft earnings next week. Investors are digesting the potential impact of its $1 billion deal with cloud-computing giant Amazon.
Microsoft, set to report its fiscal Q1 earnings on Oct. 24, is currently forming a consolidation pattern, according to data on MarketSmith.
Aggressive traders could use MSFT's Oct. 16 high of 336.14 as a potential buy point. But with earnings right around the corner, it's best to wait and see if Microsoft stock crosses that level after the report is out.
The Sept. 14 high of 340.86 is another technical level traders may use as an early buy point.
Microsoft Stock Action Muted Amid Amazon Deal News
Meanwhile, Amazon is reportedly set to deploy Microsoft 365, a set of cloud-focused office and productivity tools, among its workforce, according to a report on Tuesday from Business Insider. The deal will reportedly see Amazon spend $1 billion over five years to Microsoft for workforce licenses. Insider said Amazon was previously wary of using cloud-based software from competitors.
Microsoft stock dipped 0.6% to 330.11 in the stock market today.
Microsoft declined to comment for this story. Amazon did not return a request for comment.
To put the deal in perspective, Microsoft's total revenue last quarter alone was more than $56 billion. That means investors looking for material catalysts for top-line growth should look elsewhere. Microsoft's AI business could be that next big growth area.
Investors tuning into the earnings report for Microsoft stock next week are looking out for ways the tech giant can monetize its efforts in artificial intelligence. The increasingly crowded field is seeing a raft of new entrants with varying claims to artificial intelligence, although uses that generate near-term revenue are scarce.
Microsoft is holding above its 50-day line as it works on a base with a pivot point of 366.78, according to MarketSmith. The stock has a Relative Strength Rating of 90 and holds a Composite Rating of 97, says IBD Stock Checkup. It's currently ranked No. 2 behind Adobe in the Computer Software-Desktop group.
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