Crisis Has Become an Opportunity for Microsoft

Keep an eye on Microsoft (SYM: MSFT).

It’s wildly oversold at double bottom support dating back to August. It’s also over-extended on RSI, MACD, Williams’ %R and Full Stochastics.

In addition, according to the company, its $80 billion in planned spending on data center infrastructure is still “on track” this year, in response to a report issued by TD Cowen that it may be canceling some leases. “Thanks to the significant investments we have made up to this point, we are well positioned to meet our current and increasing customer demand,” said Microsoft, as quoted by Seeking Alpha.

“Last year alone, we added more capacity than any prior year in history. While we may strategically pace or adjust our infrastructure in some areas, we will continue to grow strongly in all regions. This allows us to invest and allocate resources to growth areas for our future. Our plans to spend over $80B on infrastructure this FY remains on track as we continue to grow at a record pace to meet customer demand.”

Analysts at Roth also said investors were “misreading” reports that Microsoft had canceled the leases of at least two new data centers with a total capacity of 200MW. Plus, Bank of America reiterated a buy rating on the stock with a $510 price target.

In short, the pullback in Microsoft is greatly overdone.

Weakness has become an opportunity for the tech giant.

Even better, recent earnings haven’t been too shabby either. In its most recent quarter, the company’s EPS of $3.23 beat estimates by 13 cents. Revenue of $69.6 billion, up 12.2% year over year, beat by $790 million.

“We are innovating across our tech stack and helping customers unlock the full ROI of AI to capture the massive opportunity ahead,” said Satya Nadella, chairman and chief executive officer of Microsoft, as quoted in a company press release. “Already, our AI business has surpassed an annual revenue run rate of $13 billion, up 175% year-over-year.”