AI Trade Stalling Sees Microsoft Dip Below 100-Day Moving Average
The AI-fueled Nasdaq 100 has traded in a tight range since October, with Microsoft shares dipping below their 100-day moving average alongside half of all index components. Microsoft’s four-quarter moving average of EBIT growth slowed to its weakest since 2023, and retail investors repeatedly bought the stock after its selloff following January earnings.
1. Nasdaq Consolidation and Microsoft Performance
Since last October the Nasdaq 100 has remained in a narrow trading range, with Microsoft shares breaking below their 100-day moving average for the first prolonged period since the COVID era. Only half of the index’s stocks, including Microsoft, now sit above both their 100-day and 200-day moving averages, signaling waning leadership.
2. Weakening Earnings Momentum
Microsoft’s combined four-quarter moving average of earnings before interest and taxes has decelerated to its lowest level since 2023 despite an uptick at peers. This slowdown in core profitability growth highlights challenges in translating AI investments into faster earnings expansion.
3. Retail Support Saves Microsoft Stock
Retail investors have stepped in at least five times over the past year to buy Microsoft stock on dips, most recently rescuing shares after the post-January earnings selloff. Persistent buy-the-dip behavior suggests continued confidence among individual traders even as momentum fades.
4. Capex Versus Return Concerns
Microsoft plans to spend heavily on AI-related infrastructure, contributing to hyperscaler capital expenditure that now exceeds 2% of U.S. GDP among top providers. Market participants are increasingly treating rising capex as a cost burden rather than a signal of future returns, raising questions about investment efficiency.