The Technical Trap
I saw a chart today that would make a technical analyst sweat: Microsoft has formed a “Death Cross.” It sounds like a heavy metal band, but it just means the short-term trend has crossed below the long-term trend. The stock is down about 5% this month, sliding into next week’s earnings report like a runner sliding into home plate—except nobody knows if they are safe or out.
It is a strange moment for the company. They are arguably the leader in the most important technology of our lifetime (AI), yet the market is treating them like a tired utility. The reason? The bill is coming due.
The Capex Conundrum
Investors are getting anxious about the “Capex” number—the billions Microsoft is pouring into data centers and chips to power OpenAI and Copilot. The narrative has shifted from “Spend whatever it takes to win AI” to “Okay, you spent it. Where is the profit?”
But here is the irony the Barron’s article points out: this “slump” has pushed Microsoft’s valuation down to around 31.5x earnings. In a world where tech stocks often trade at nosebleed valuations, this looks suspiciously like a bargain.
The Long Game
While the market freaks out about “Greenland tariffs” and technical patterns, the fundamentals tell a simpler story. Microsoft is building the railroad for the next century. Yes, railroads are expensive to build. But once the tracks are laid, you own the route.
If you believe AI is a bubble, the “Death Cross” is a warning. If you believe AI is the new electricity, this dip isn’t a death sentence; it’s a discount. I suspect that in five years, we won’t remember the chart pattern of January 2026, but we will definitely be using the software they are building today.