Microsoft stock looking to snap 4-week skid, buy in January? Here’s what the basic, chart action is all about now.
Microsoft (MSFT) started the new year with a small year-to-date gain, then lost it in recent days. Stocks had a tough time keeping up with the major stock market averages on Tuesday. So, is Microsoft stock worth more than $3 trillion in 2025, bought in January?
This story reviews the fundamental, technical and institutional sponsorship requirements of the veteran technology giant and long-time stock market leader.
Wednesday’s action? A lot of promise for Microsoft stock. It rose 2.5% from the average volume to 426.31 and o forcefully broke above a key long-term technical level, the 200-day moving average. Volume accelerated compared to Tuesday, a sign that big fund managers are seriously deploying capital.
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On Tuesday, CNBC reported that an obtained memo revealed that Microsoft is planning job cuts and cost-cutting measures in its consulting division. The measure will affect less than 1% of the total workforce.
Ahead of Wednesday’s action, this story noted in IBD’s Big Picture columns that the enterprise software, cloud computing and gaming hardware giants didn’t resist selling as the day’s sales surged as growth stocks weighed on Friday. .
Microsoft stock has been struggling to track key technical levels on the Microsoft stock chart recently. For example, sellers have pushed stocks below both the 50-day moving average and the longer-term 200-day line, which tracks roughly 10 months worth of price action.
A healthy stock normally shows not only a steady rise, but also a positive slope on both of these two moving averages. A moving average line means that the stock price is rising. Now, Microsoft’s 50- and 200-day lines are breaking.
Microsoft stock started the year below both of these key technical levels, then nearly retook the 50-day line during Monday’s stock market rally. But like the Nasdaq and S&P 500, the megacap tech retreated from its session high of 434.32 to close midway through the session.
That move prompted some traders to use the timing to sell into strength.
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Microsoft stock today
Trading near 426, Microsoft still trades 9% above its 52-week high of 468.35. Compare that to the fact that the Nasdaq composite is now trading at around 19,492, less than 4% below its peak of 20,204.
In the year Through 2024, Microsoft’s 12% gain was good, but paled in comparison to the S&P 500’s 23.3% gain.
Therefore, from this point of view, Microsoft stock is not the market leader in the short term.
Microsoft’s warm relative strength rating of 52 on a scale of 1 to 99 is also supported, down from 56 last week.
In general, choose stocks that have an RS score of 80 or higher. What does it mean if you do this? The advantage for individual investors: You are focusing on companies that have beaten at least 80% of the total stock market over the past 12 months. Such relative strength is very important when choosing the best growth stocks today.
According to IBD’s stock analysisMicrosoft stock gets a composite rating score of 77, also on a scale of 1 to 99. In general, the best stock market winners say it’s at a level of 90 and above that they start making big profits. .
What is the IBD composite rating, and how to use it wisely
Mutual fund ownership grows
It is a widely recognized name in terms of institutional ownership. Christmas, MarketSurge data It highlights that 41 percent of Microsoft stock is owned by mutual funds. Banks own only 2 percent of the 7.435 billion shares.
Mutual funds are among the most influential classes of investors in determining the success or failure of individual growth stocks. why?
Because of their enormous buying power, the best and largest mutual funds can take weeks, even months, to fully fill a position in a stock. Their continuous purchase ultimately creates positive business psychology. On a chart, buying a large fund can help a stock market leader make a significant correction back to 52-week or all-time highs and then climb to new highs.
Such activity will make all investors happy in the stock for a long time.
The number of mutual funds owning Microsoft stock rose from 9,643 funds in the first quarter of 2023 to 10,387 by the end of 2024.
However, some top mutual funds have recently trimmed their holdings in Microsoft.
Among IBD mutual fund index members, MFS Growth Fund ( MFEGX ), JPMorgan Large Cap Growth ( OLGAX ) and Fidelity Contrafund ( FCNTX ) all reduced their positions during the fourth quarter. These three top performers had a total of 54 million shares.
Income picture
Bullish investors in Microsoft stock hope the company’s investments in AI technology will help drive continued growth.
Analysts polled by FactSet expect earnings to rise 11 percent to $13.08 a share in the current fiscal year ending in June, then 16 percent to $15.11 in fiscal 2026.
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Revenue rose 11 percent to $68.9 billion at the end of December, followed by a 13 percent year-over-year increase in the next three quarters.
So the basic picture for this megacap tech still remains red. Based on IBD’s research, small companies often show high double- and triple-digit growth in both revenue and sales. Indeed, compared to the boom days of the late 1980s and 1990s and some decades after, the Redmond, Wash., company’s growth has slowed. But a five-year earnings stability factor of 6 on a scale of zero (extremely stable) to 99 (highly-volatile) indicates a company’s earnings power.
So while the fundamentals and funding ownership metrics look positive, Microsoft has yet to establish a solid base from which to climb to new highs and provide a good new buy point.
Final judgment
Therefore, based on IBD’s rules and investment methodology, until the stock recently breaks the 456.16 high or crosses a well-established trend line, Microsoft stock is not yet a buy in January.
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