Microsoft Corporation (NASDAQ:MSFT) stock are trading lower Thursday, on pace for its worst day since March, 2020. The company reported second-quarter financial results on Wednesday after the market closed.

• Microsoft stock is showing notable weakness. Why is MSFT stock falling?

Microsoft Delivers Earnings, Revenue Beat

Microsoft reported adjusted earnings per share of $4.14, beating the consensus estimate of $3.97. In addition, the company reported revenue of $81.27 billion, beating the consensus estimate of $80.26 billion.

Microsoft said operating income increased 21% year-over-year to $38.3 billion, while net income rose 60% to $38.5 billion. Operating cash flow came in at $42.4 billion, with free cash flow of $24.3 billion.

Microsoft Cloud revenue totaled $51.5 billion in the quarter, representing a 26% year-over-year increase. Within the cloud business, Azure and other cloud services revenue increased 39% year-over-year. Investors appear to be concerned about a slowdown in Azure momentum on Thursday, driving shares lower.

By segment, Productivity and Business Processes revenue rose 16% year-over-year, driven by growth across Microsoft 365 Commercial and LinkedIn. Intelligent Cloud revenue increased 29% year-over-year, reflecting continued demand for cloud infrastructure and enterprise services. More Personal Computing revenue declined 9% year-over-year.

The company said commercial remaining performance obligations increased 110% year-over-year to $625 billion, reflecting long-term cloud and enterprise contracts. Microsoft noted that a substantial portion of these obligations is expected to be recognized as revenue over the next several years.

Capital expenditures increased during the quarter as Microsoft continued to invest in data center capacity and infrastructure to support cloud and AI workloads, which also appears to be weighing on shares. The company said infrastructure investments remained elevated as demand for cloud services continued to scale.

Microsoft sees third-quarter revenue of $80.65 billion to $81.75 billion versus the consensus estimate of $81.17 billion.

Analyst Changes: Following the earnings report, multiple analysts issued price target adjustments.

Technical Analysis of Microsoft

Microsoft is currently trading 6.8% below its 20-day simple moving average (SMA) and 10% below its 100-day SMA, indicating a bearish trend in the short to medium term. Over the past 12 months, shares have increased by 8.88%, positioning them closer to their 52-week highs than lows, suggesting some resilience despite the current pullback.

The RSI is at 55.71, which is considered neutral territory, while the MACD is above its signal line, indicating bullish momentum. This combination suggests that while the stock is facing some selling pressure, there remains underlying strength.

Benzinga Edge Rankings

Below is the Benzinga Edge scorecard for Microsoft, highlighting its strengths and weaknesses compared to the broader market:

• Quality: Strong (Score: 79.51) — Balance sheet remains healthy.
• Value: Weak (Score: 17.25) — Trading at a steep premium relative to peers.
• Momentum: Weak (Score: 28.94) — Stock is underperforming the broader market.

The Verdict: Microsoft’s Benzinga Edge signal reveals a mixed outlook. While the strong Quality score indicates a healthy balance sheet, the weak Value and Momentum scores suggest that the stock is facing challenges in the current market environment.

Microsoft Shares Tumble Thursday

MSFT Price Action: At the time of writing, Microsoft shares are trading 11.45% lower at $426.71, according to data from Benzinga Pro.

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