Microsoft faces a critical $520 support test as tech stocks extend losses

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Microsoft faces a decisive support test

Nasdaq selloff outweighs strong quarterly earnings

The main source of pressure has been the further deterioration in the U.S. stock market: following yesterday's 12.6% plunge in Alphabet shares, investors reacted negatively to quarterly results from Amazon and Intel, causing Nasdaq 100 futures to lose more than 2% today, while S&P 500 futures declined by approximately 1%.

Unlike many of its competitors, Microsoft reported results that significantly exceeded expectations, but even strong earnings failed to fully protect its shares from the broad reduction of positions in the technology sector. This suggests that the current correction in MSFT is driven more by a market-wide reassessment of AI company valuations than by any direct deterioration in the corporation's fundamentals.

$25 billion debt deal raises questions about capital costs

The main corporate development of the past 24 hours was the finalization of the terms of Microsoft's $25 billion bond offering, officially announced by the company on October 29. Unlike earlier reports about potential fundraising, the specific terms of the deal are now known: Microsoft will issue ten tranches of senior unsecured bonds, including eight fixed-rate tranches and two floating-rate tranches.

Maturities range from November 2028 to November 2066, with the yield on the longest-dated 40-year bonds reaching 6.35%, while the 10-year notes maturing in 2036 will yield 5.55%. The offering is expected to close on November 4. The proceeds are intended for general corporate purposes, including capital expenditures, working capital, acquisitions, and share buybacks.

The distinctive feature of this deal is that Microsoft is returning to the debt market not because of insufficient operating liquidity, but to finance its massive infrastructure program more flexibly. However, for investors, the offering raises a new question about future debt servicing costs: even a company with the highest credit ratings must raise long-term financing at relatively high interest rates. As a result, the market is paying increasingly close attention not only to Azure's growth rates but also to the ability of new data centers to generate returns exceeding the cost of borrowed capital.

Break below support could accelerate the correction

Although MSFT's long-term outlook remains constructive, a break below support around $520 is possible in the near term, potentially leading to a decline toward the psychological $500 level. A break above resistance at $530, as I stated in Microsoft faces pressure near $525 despite strong earnings and Azure growth, would lead to a rise toward $540–550.

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