The recent excitement surrounding AI has resulted in some significant upside for Microsoft over the last few weeks. However, with earnings due out tomorrow is Microsoft in for an earnings shock?

Although speculation is strong that Microsoft’s ChatGPT play could challenge Google’s search dominance, that will not equate to big sales growth in the near term. Furthermore, falls in PC sales, a slowdown in cloud services, and small projected revenue growth could weigh on Microsoft’s share prices when earnings are released.

From a seasonable perspective, Microsoft tends to see weakness between April 24 and May 24. The average return has been -2.58% with 60% of trades presenting with losses during this time.

Major Trade Risks: The major trade risk here is if earnings are not as bad as feared which can result in some upside for Microsoft.

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