Microsoft Tests Key Level After MedTech Cyberattack Incident; Is The Stock A Buy Now?

Microsoft (MSFT) stock extended efforts to build some support at a key level Tuesday after software stocks rotated out of favor amid growing fears of disruption from artificial intelligence tools.

The stock has trended lower after investors drove it down 10% on an underwhelming outlook in late-January. The software heavyweight beat fiscal second-quarter expectations, but its forward guidance fell short. Is Microsoft stock a buy or sell now?

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Shares fell last week in a wider market sell-off and after medical technology company Stryker (SYK) reported a cybersecurity incident involving its Microsoft environment. The stock is trying to find support at around 400, and surpassed that price during Tuesday’s session.

The midpoint of Microsoft’s sales fiscal third-quarter outlook of $81.2 billion missed the $81.23 billion consensus estimate. That suggested a slowdown in growth from the second quarter. The stock tumbled 10% on Jan. 29, falling below its 50-day moving average in heavy volume and triggering a sell signal.

A more significant update came by way of its softer capital expenditure outlook for the current quarter. However, its spending of $37.5 billion in the second quarter exceeded expectations by $1 billion.

Earnings in the second quarter were $4.14 per share on sales of $81.27 billion. Analysts polled by FactSet were looking for $3.91 per share on $80.31 billion in sales.

Microsoft Falls To 10-Month Lows

After five consecutive months of losses, the stock is edging higher in March, according to IBD’s MarketSurge chart analysis tool. The stock is below its 50-and 200-day moving averages,

The stock is one of the Magnificent Seven leaders. For Microsoft’s fiscal 2026, which started on July 1, 2025, Wall Street is looking for a 19% earnings increase to $16.48 per share. In 2027, analysts project profit growth of 15% to $19.01 per share.

Are These Magnificent Seven Stocks A Buy Now?
Alphabet | Amazon | Apple | Meta | Microsoft | Nvidia | Tesla

Microsoft Stock: Buy Or Sell?

The software maker is an IBD Long-Term Leader and among IBD’s Tech Leaders to watch. The stock leads the desktop software industry group, according to IBD Stock Checkup.

Steady earnings growth over the past eight quarters has resulted in an Earnings Per Share Rating of 96.

However, the Relative Strength Rating of 22 is well below IBD’s recommended threshold of 80. The stock’s Composite Rating is 56 out of 99.

Microsoft stock falling below its 50-day moving average after the company’s quarterly report triggered a sell signal. The weak reaction to its update should serve as a caution to investors. It is best to wait until Microsoft reclaims its key 50-day moving average before buying the stock.

Over the past 13 weeks, mutual funds have been net sellers of the stock. That gives Microsoft an Accumulation/Distribution Rating of D-. Demand for Microsoft stock has also been below average over the past 50 trading days, resulting in a 0.7 up/down volume ratio.

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However, there has been strong, long-term support from institutional managers, as evidenced by MarketSurge’s quarterly fund ownership data. More than 10,000 funds have held shares over the past eight quarters.

Total fund ownership sits at 42% of outstanding shares. In the IBD mutual fund index, the MFS Growth Fund (MFEGX) and the JPMorgan Large Cap Growth Fund (SEEGX) hold Microsoft shares.

Please follow VRamakrishnan on X/Twitter for more news on the stock market today.

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