Microsoft Stock Holds Steady Despite Meta's AI Launch
Microsoft's stock price has been relatively stable despite the recent launch of Meta's consumer AI agent, Muse. The market's indifference to Muse is due in part to Microsoft's business model, which focuses on selling AI to IT departments through seat licenses and consumption contracts, rather than to consumers through app stores.
The company's fiscal fourth-quarter report delivered strong numbers, with Azure growing 43% and crossing $100 billion in annual revenue. Commercial remaining performance obligation reached $678 billion, up 84%. Microsoft 365 Copilot passed 30 million paid seats. Annual revenue exceeded $331 billion, up 18%.
The report also revealed that Microsoft's capital expenditure guidance for fiscal 2027 is a significant increase of 35% to $255 billion to $260 billion, compared to the previous year's commitment of $190 billion. This increase in spending is justified by Microsoft's demand backlog, which stands at $678 billion.
The stock has been consolidating after a violent move, and its recent price sequence shows that it is still above its 200-day simple moving average. The immediate resistance is $499.70, followed by the mid-$530s and then the $553.72 high, which represents the pre-capex-panic valuation.