Microsoft Corporation's stock has experienced a recent period of underperformance compared to its counterparts in the technology sector. However, according to analysts from Citi Research, there are reasons to believe that Microsoft's stock is primed for a stronger showing in the coming months.
Microsoft declined to it 38.2% Fibonacci retracement (blue horizontal line) over July and August before finding support. Since then, MSFT.us has been appreciating and its green 5-week EMA has crossed positively above its orange 10-week EMA (red circle). Its weekly RSI dipped briefly below 50 before popping back above (blue rectangle): above 50 is regarded as the bullish side of the oscillator suggesting an underlying positive momentum.
Citi Research Catalyst Watch
The Citi Research team has initiated a positive 90-day catalyst watch on Microsoft's stock, expressing optimism about the potential for significant positive developments leading up to the end of the year. They describe this as a "promising catalyst trajectory" that lies ahead.
In their analysis, the Citi analysts note several factors contributing to their positive outlook. They believe that Microsoft's shares could perform well in the lead-up to the fiscal first-quarter earnings report, attributing this potential strength to a stabilizing personal computer market, improved performance in the Azure cloud computing platform, and a notable uptick in revenue growth.
Furthermore, Citi Research identifies various artificial intelligence (AI) advancements that could benefit Microsoft. One of these is the possible general availability release of Microsoft's Copilot software, which has garnered favourable feedback during Citi's customer evaluations conducted in August.
Additionally, the Citi team expresses enthusiasm about Microsoft Dynamics, an enterprise accounting and sales suite. They suggest that this product may increasingly contribute to Microsoft's growth story, particularly as it benefits from industry consolidation and the tailwinds of AI-driven innovations.
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.