Global tech giants created a monster called AI and are now unable to stop spending billions of dollars on building it. The capital expenditure has crossed the $100 billion mark and is also inching toward $200 billion. Building the AI sector is getting expensive, as the bills are never-ending. Companies such as Amazon, Walmart, and Uber have realized this and have started to cap their AI spending. Microsoft stock (NASDAQ: MSFT) is also under pressure due to the capex, and its price has now fallen close to its 52-week low.
Mircosoft stock opened Tuesday’s bell at $367 and is only 4% away from falling below its 52-week low of $356. The $356 zone now represents a massive psychological point, and falling below it could trigger a wave of sell-offs. The next support level for MSFT could test the $340 floor if the $356 level gets breached. Wall Street is facing AI demand fatigue and is also panicking over Microsoft’s $190 billion in spending. Corporate America is yet to draw a line in the sand on capping the spending, and is realizing it the hard way.
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What’s Next For Microsoft Stock If It Falls Below Its 52-Week Low?
Microsoft stock plunging below its 52-week low can be seen both as good news and bad news. The bad news is for those who took an entry position at its high, and now have to wait longer for a bounce back. The good news, which should be taken cautiously, is for those who were waiting for an accumulation zone or consolidation phase, and this falls right into the picture that traders were bracing for.
For patient investors who are rightly tracking how smart money moves, Microsoft’s next correction phase isn’t a complete red flag. It’s a wealth accumulation period, where MSFT plunging to its 52-week low is a rare event. Buying Microsoft at the $340 range or below could be beneficial to investors. This could be a temporary test of its prospects before it steers course and moves ahead in value.