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Redmond, Washington-based Microsoft Corporation (MSFT) is a key player in the computer industry. The company develops and supports software, services, devices, and solutions. With a market cap of $3.1 trillion, Microsoft offers applications, extra cloud storage, and advanced security solutions serving customers worldwide.
Companies worth $200 billion or more are generally described as “mega-cap stocks,” and MSFT definitely fits that description, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance within the tech sector. The tech giant has made significant progress in the rapidly expanding generative AI industry, seamlessly incorporating it into its search engine and various productivity tools.
Despite its strengths, shares of Microsoft have had a rough ride. After hitting a 52-week high of $468.35 on Jul. 5, it has slipped 10.9%. Over the past three months, MSFT stock gained marginally, lagging behind the Nasdaq Composite’s ($NASX) 5.8% gains during the same time frame.
In the longer term, MSFT shares rose 10.9% on a YTD basis and 27% over the past 52 weeks, underperforming the Nasdaq Composite’s 18% surge in 2024 and 27% returns over the past year.
To confirm the bearish trend, Microsoft has traded below its 50-day moving average since mid-July. However, the stock is trading above its 200-day moving average with slight fluctuations in early August.
On Jul. 31, MSFT shares dipped more than 1% after reporting fiscal Q4 earnings that exceeded analysts' expectations. While the cloud unit fell slightly short of forecast at $28.5 billion, its overall revenue grew by 15.2% year over year to $64.7 billion, with EPS rising by 9.7% annually to $2.95. The company anticipates fiscal 2025 revenue to reach approximately $279 billion, with EPS projected at $13.04.
Microsoft faced challenges in mid-July due to a CrowdStrike outage affecting major services and devices, prompting the cybersecurity industry to address vulnerabilities at the Windows Endpoint Security Ecosystem Summit. Additionally, the company’s recent underperformance can be attributed to increasing capital expenditures related to AI infrastructure.
Microsoft’s rival, Dropbox, Inc. (DBX), has had a rough ride. Dropbox's shares nosedived, plummeting 14.7% in 2024 alone, and it dipped 9.9% over the past 52 weeks.
Wall Street analysts are highly bullish on Microsoft’s prospects. The stock has a consensus “Strong Buy” rating from the 39 analysts covering it, and the mean price target of $499.58 suggests a potential upside of 19.8% from current price levels.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
