The worst among the "Big Seven"! Microsoft is slipping toward a critical "life or death" line...

Cailian Press, February 25 (Editor: Xiaoxiang)
Historically, shorting Microsoft stock has always been considered a “foolish” move. Will this time be different?

Since 2026, Microsoft has become the worst-performing stock among the “Big Seven” U.S. stocks. Since reaching a record closing high of $539.82 on October 28 last year, its stock price has fallen a total of 28%, with a 19.4% decline just this year.

This sharp decline has brought Microsoft’s stock price close to a key technical indicator—the 200-week moving average.

Many technical analysts have recently noticed that Microsoft’s Tuesday closing price was only about 3.5% above its 200-week moving average of $375.80. To put this in perspective, the last time Microsoft closed below its 200-week moving average was back in January 2013.

The 200-week moving average roughly reflects the average stock price over the past four years. While it’s not uncommon for stock prices to dip below short-term technical indicators (like daily moving averages) during negative news cycles, the 200-week moving average often reveals longer-term trend directions.

An upward-sloping 200-week moving average typically indicates a long-term bull market, while a downward-sloping one suggests the stock may enter a prolonged downtrend. Since January 2012, Microsoft’s 200-week moving average has never experienced consecutive weeks of decline.

Currently, Microsoft’s stock price is approaching this critical crossroads. For many technical analysts, the future trend will depend on this—generally, for companies with a solid long-term growth narrative facing only temporary setbacks, the 200-week moving average has historically served as a support level for rebounds.

According to data from Dow Jones Market, historically, when Microsoft’s closing price is within 3% of its 200-week moving average, the stock often experiences a significant rebound.

The most recent instance was in January 2023, when within four weeks, Microsoft’s stock rose by 14.9%. Looking further back, in November 2022, Microsoft’s stock also closed within 3% of the 200-week moving average, and within four weeks, it gained a total of 15.2%.

Can Microsoft “stop the bleeding”?

Compared to other tech stocks, recent sell-offs have caused Microsoft’s market cap to fall below that of Google’s parent company Alphabet, reversing a decade-long ranking. Over the past few weeks, Microsoft’s forward P/E ratio even dipped below IBM’s.

Historically, many investors have been willing to pay a premium for Microsoft stock, but recent reliance on software business and sluggish cloud growth have raised doubts among investors about its aggressive AI spending. Currently, Microsoft’s forward P/E ratio is about 21.4x, compared to Alphabet’s 26.5x.

However, some market observers believe that the pessimism surrounding Microsoft may have gotten ahead of itself.

Matt Stucky, Chief Investment Officer of Northwestern Mutual’s stock portfolio, said that concerns about AI redefining software business have increased, leading to higher short-term volatility in Microsoft’s stock. Microsoft Azure’s 39% growth in the fourth quarter lagged behind Google Cloud’s 48%, and investors are unhappy with Microsoft’s decision to allocate more computing resources to internal projects.

But Stucky pointed out that, from a longer-term perspective, investing computing resources into internal projects to retain existing customers might be more strategically valuable than reselling available computing power through Azure cloud services.

“I think, in this volatile environment, you have to stay open-minded. Companies will make strategic decisions on how to utilize their available computing capacity, especially in this current shortage,” Stucky said. “Public sentiment can shift quickly.”