Microsoft's stock chart just flashed a bullish signal for a software comeback

By Christine Ji

Software stocks are shaking off AI jitters as Microsoft shares break above their 200-day moving average

Shares of Microsoft broke above their 200-day moving average for the first time since January.

Microsoft's stock momentum suggests that the software sector may be staging a lasting recovery from the artificial-intelligence selloff.

On Monday, shares of Microsoft (MSFT) rose 2% to break above their 200-day moving average for the first time since Jan. 7, according to Dow Jones Market Data. The 200-day moving average, calculated by taking the average of a stock's closing price over the past trailing 200 sessions, can point to long-term stock trends. A breakout above the benchmark typically signals bullish momentum.

For Microsoft, crossing this milestone could indicate that the stock is shrugging off AI fears. Microsoft's price action is an encouraging signal that the recent software rally is "durable," Evercore ISI analyst Kirk Materne pointed out in a Monday note.

The company is hosting its Microsoft Build developers conference this week, and investors expect to learn more about Microsoft's first-party AI models and enterprise AI applications.

Read: Is Microsoft ditching OpenAI for Anthropic?

Shares of Microsoft have been weighed down by depressed software sentiment and broader AI concerns. Following the past two earnings reports, investors were left disappointed by the level of Azure cloud acceleration as well as statistics around Copilot adoption. Leading up to today, Microsoft's stock had closed below the 200-day moving average for 98 consecutive trading days - the longest stretch below the benchmark since 2023.

Microsoft's stock breakout comes as the software sector heads toward its best stretch in decades. The iShares Expanded Tech-Software Sector ETF IGV has rallied 14% over the past three trading sessions, marking the best three-day performance since October 2001 and finally breaking into positive territory on a year-to-date basis, according to Dow Jones Market Data.

Shares of other major enterprise-software names also rose on Monday. Salesforce's (CRM) stock surged 10%, putting it on track for the best two-day performance since Aug. 2020. Shares of ServiceNow (NOW) are also up 10%, continuing the rally after just recording their best monthly performance on record in May.

See more: ServiceNow, Adobe stocks jump as Nvidia's new AI chip sparks software rally

-Christine Ji

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06-01-26 1304ET