- Summary:
- Microsoft stock price faces pressure in 2024 after the company spent USD 46 billion on AI capex last year. Will the investment pay off?
Microsoft stock price has had a torrid opening in 2025, with no gain in the first two trading days. In addition, it extended its loss-making streak to five successive sessions on Thursday, hitting a monthly low of $426. The stock has been on a steep descent in the last month, with its returns at -2.6%.
Why Microsoft stock price could tank in 2025
Microsoft (NASDAQ: MSFT) announced a share buyback program in September 2024 that could see it repurchase up to $60 billion worth of stock. However, that has failed to prevent the decline, partly because of the small portion of the repurchase relative to the company’s market capitalisation.
With the company valued at $3.1 trillion, the repurchase will only sweep up about 2% of the stock from the market. However, investors are looking at statement wins in the tech space, especially on the AI front. Microsoft has invested substantially in AI, and spent $46 billion in AI capex, including $20 billion on GPUs. The company also owns a 49% stake in OpenAI, the startup considered the epicenter of the AI revolution.
However, investors are concerned that the practical utility of generative AI has largely slowed down in recent months, which could translate into delayed ROI. For instance Microsoft’s Copilot AI has failed to spark the propulsion the company could have hoped for.
Enterprises have been slow to Copilot in their operations, making the $35/per month price tag seem overambitious. Therefore, unless the company develops breakthrough applications of AI, its large budget spend could suffer the same fate as Meta’s failed Metaverse experiment.
Microsoft stock price prediction today
On the chart below, Microsoft stock price will likely pivot at $422. Also, the downside is likely to prevail as per the momentum indicator. With the sellers in control, MSFT price will likely move to the first support at $417.70. Breaking below that level could accelerate the downward momentum and potentially test $414.90
Conversely, moving above $422 will favour the buyers to be in control. If that happens, MSFT price could move higher and find the first resistance at $425.50. The downside thesis will be invalid if the stock breaches that barrier. Also, a stronger upside momentum could push it higher and test the second resistance at $429.70.
