Peter Smith
⬤ Microsoft has dropped sharply into a long-term support zone near its 200-week moving average, a level that's only been touched three times over the past 13 years. As Mike Investing notes, every single one of those tests was followed by a strong move higher, and some technical analysts are now pointing to a $600 price target if the pattern repeats.
⬤ The stock has pulled back from highs near $550 in early 2025 into the high $300s, putting it right at that critical long-term inflection point. Many analysts see a potential near-term floor forming around $350-$360, after which a meaningful rebound could take shape. Worth noting: previous 200WMA bounces produced rallies exceeding 150% from the low. Microsoft Tests Key Support Zone as Stock Pulls Back to Multilevel Confluence Area breaks down exactly how multiple technical indicators are now converging at this same price area.
Each prior re-test of this support level was followed by substantial upside momentum.
⬤ Beyond the chart setup, valuation has also shifted in a way that's hard to ignore. MSFT's forward P/E has compressed toward decade-low levels, which typically signals a risk-off environment rather than a buying panic. That combination of technical support and compressed valuation is covered in depth by Microsoft Tests Key $380 Support as Forward P/E Drops to 22x, which makes the case that the next move hinges on whether MSFT can hold these critical levels. And it's not happening in isolation, either: Mag7 Stocks: NVDA, GOOG, and MSFT Lead 2025 Surge puts Microsoft's action in the context of broader mega-cap tech momentum.
⬤ How MSFT handles this zone matters well beyond the stock itself. A clean hold and reversal would confirm the long-term pattern and likely lift sentiment across large-cap tech. A breakdown, on the other hand, could extend the correction and weigh on the broader sector. Either way, this is one of the more important technical tests Microsoft has faced in over a decade.
Peter Smith
