As we jump into third quarter earnings, Wall Street will pay close attention to the tech sector where artificial intelligence continues to drive sky-high earnings expectations. That includes Microsoft (NASDAQ: MSFT), which will post earnings in late July.

Wall Street will pay close attention to its reporting on Azure, which has become one of Microsoft’s most valuable businesses, benefiting from enterprise demand for cloud computing and AI services. As organizations increasingly deploy generative AI applications, Azure has positioned itself as a preferred platform thanks to Microsoft’s deep partnership with OpenAI and its expanding portfolio of AI tools.

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In addition, Microsoft continues investing aggressively in data centers, graphics processing units (GPUs), networking equipment, and custom infrastructure needed to support AI workloads. Capital expenditures have risen substantially over the past year, leading investors to question if and when those investments will pay off. 

Most recently, after a massive pullback from about $466.32 to a low of $349.20, the tech giant is just starting to pivot higher. It’s also starting to pivot higher on RSI, MACD, Williams’ %R, and on Full Stochastics. Last trading at $379.42, we’d like to see Microsoft rally back to $400 initially. Longer-term, we’d like to see it again challenge its prior high of $466.32. 

Sincerely,

Ian Cooper