Capital expenditure rises nearly 80%: Can MSFT avoid deeper losses?

Traders Union
All News
Stocks
Microsoft up 0.28% as Azure hits $100B

Highlights

Microsoft reported annual Azure cloud revenue above $100 billion and 43% year-over-year Azure growth, confirming strong enterprise demand for its cloud and AI products.
Quarterly results included 30 million paid Microsoft 365 Copilot seats and $54.9 billion in total cloud revenue, with capital expenditure for 2026 projected at $115.95 billion.
Shares of Microsoft show prevailing short- and medium-term selling pressure with a 74% probability of trading between $471.35 to $492.01 over the next 2 to 3 days.

Cloud revenue milestone as AI expansion raises cash flow risks

Microsoft surpassed $100 billion in annual Azure cloud revenue for the first time, confirming its position at the forefront of enterprise cloud adoption and AI-driven services, according to Foreignpolicyjournal. This achievement, supported by quarterly results featuring 30 million paid Microsoft 365 Copilot seats and Q4 revenue reaching $90 billion, demonstrates tangible demand for its infrastructure and AI products, as highlighted by Finance Yahoo. Persistent year-over-year growth in Azure of 43% and total cloud revenue of $54.9 billion further establish the company's operational momentum, though the near 80% rise in capital expenditure to $115.95 billion for fiscal year 2026 introduces concerns about future free cash flow and profitability dynamics.

Downward momentum persists as short-term resistance holds

On the technical front, MSFT is trading below the MA-20 and MA-50 on the hourly chart, while still staying above the MA-200 on the daily timeframe. The Ichimoku Kijun is currently at $488.58, serving as immediate resistance. Momentum indicators are broadly negative: RSI is at 35.92 (Sell), MACD signals Strong Sell, and the ADX corroborates a continued selling bias. Both Stochastic RSI and CCI show neutral readings, Bull/Bear Power flags an oversold intraday condition favoring sellers, and the Awesome Oscillator is neutral, offering no fresh confirmation for the downside.

Downside probability rises as range-bound action dominates outlook

In the near term, MSFT is expected to fluctuate within a range of $471.35 to $492.01, reflecting typical volatility relative to current levels. Probability models suggest a higher likelihood for downside movement, with a 74% chance of a downturn and only 26% probability of an upside move in the next 2-3 trading days. The base scenario calls for consolidation between these boundaries; however, a breakthrough above $488.58 could see a push towards upper resistance, while a move below $471.35 would add to downside risk.

Viktoras Karapetjanc, expert at Traders Union, sees Microsoft’s record Azure revenue and strong quarterly results as key signals of sustained enterprise demand and successful AI integration. He notes that robust cloud growth and high Copilot adoption strengthen Microsoft’s leadership in a pivotal tech sector. However, the sharp rise in capital expenditure highlights a potential headwind for margin trends and cash flows. Overall, Karapetjanc believes the fundamental and macro picture remains constructive in the context of recent volatility. "If Microsoft maintains this growth trajectory while managing spending, the stock has room to outperform once the current consolidation resolves."

Earlier, analysts noted that market leadership was broadening beyond mega-cap technology stocks, with strength appearing across a wider range of sectors and smaller market-cap names. In the case of Microsoft, the current technical setup signals heightened downside risk in the near term, making the $471.35 support level a critical threshold for traders to monitor.

Source of Data: MSFT Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.