AI in Focus

As US earnings season continues, the big focus today will be on tech titans Microsoft and Alphabet. Along with the focus on headline earnings and revenues traders will be particularly keen to receive the latest details about both company’s AI businesses. ChatGPT and Bard are at the forefront of the commercialisation of AI and with JP Morgan declaring this week that the AI revolution has driven more than half of the gains in global stocks this year, traders are keen to gain a further insight into the developments underway and future plans regarding AI.

Microsoft Forecasts

Looking at Microsoft, in terms of the headline numbers, the market is expecting Q1 EPS of $2.23 on revenues of $51.019 billion. If confirmed, these results will mark a slight decline from the prior quarter but a slight increase year-on-year. However, the bigger focus is likely to be centered around the company’s plans and in particular, its investments in OpenAI which runs ChatGPT. Many players are calling the current tech environment an AI arms race meaning that, in terms of stock movements, the company with the strongest AI plans looks likely to enjoy the biggest gains near-term.

Technical Views

Microsoft

The rally in Microsoft has seen the market breaking out above the bear trend line from last year’s highs and above the 265.55 level. For now, the rally has stalled into a test of the 292.46 level and is correcting lower. With momentum studies turned bearish there are risks of a further move lower. However, while price holds above the 265.55 level and the rising trend line from YTD lows, the outlook remains bullish and in favour of an eventual break of 292.46.