Microsoft share price benefits from its AI offering



Microsoft's financial results for the September quarter came in better than expected. Part of this was due to the company's cloud computing business. Importantly its Azure cloud business was up 28% on a constant currency basis, better than the 25%-26% company forecast. Of the 28%, three percentage points came from AI services, which bodes well for Microsoft ( as its AI offering are weighted towards the second half of the financial year.

In addition, Microsoft is launching a new $30/month AI assistant for its Office suite of products in November. Moreover, its Azure OpenAI service is showing growth with more than 18,000 organisations using it (up from 11,000 in July).

Effectively, the market regards AI projects and resulting growth opportunities as an important metric. As such, the share price is showing signs of demand.

Technical Analysis

Microsoft's technical picture is encouraging. Its green 5-week EMA has crossed above its orange 10-week EMA (black circle.) Its weekly RSI is showing signs of improving momentum and has moved above 50 (black rectangle). The longer it maintains above 50, the more momentum support the share price will have.

Another positive is that the relative strength chart (MSFT/SPX500) is showing signs signs of outperformance. I.e., may potentially outperform the broader SPX500 index. The relative strength chart's green 5-week EMA has bullishly crossed above its orange 10-week EMA (green ellipse). Moreover, its RSI is tracking on the bullish side of 50 (green rectangle). The longer it maintains above 50, the greater the likelihood that continues to outperform the broader market.

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

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