The company reported GAAP earnings of $1.71 per share, which cruised past estimates by 50 cents per share. Non-GAAP earnings of $1.37 per share topped expectations by 16 cents. It gets better, though. Revenue of $33.72 billion jumped 12.1% and crushed estimates by $920 million.
For its coming fiscal year, Microsoft management still expects double-digit revenue growth. The midpoint of management's first-quarter outlook came in ahead of expectations as well.
Why then are shares are up just 1.35% after such a strong report? While the stock backed off its highs coming into the report -- down by just over 2% -- it was still up more than 33% for the year and sporting a $1 trillion market cap. In other words, the bar was set pretty high.
On Friday, it's leading the way in terms of big tech, with a mixed picture from FAANG. Apple (AAPL - Get Report) , Alphabet (GOOGL - Get Report) (GOOG - Get Report) and Netflix (NFLX - Get Report) are all in negative territory in midday trading, while Amazon (AMZN - Get Report) and Facebook (FB - Get Report) are just north of break-even for the session.
If Microsoft stock can't rally on these strong results, what can it rally on?
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Trading Microsoft Stock
Microsoft stock reversed off the $135 level on Thursday and closed above the rising 20-day moving average after falling below that mark earlier in the session. Shares then gapped higher on Friday to new highs -- clearing last month's high at $139.40 and this month's high at ~$139.50 -- before fading off its opening levels.
That leaves investors in a bit of a tricky spot. Ideally, MSFT stock will hold above last month's high, but even more ideal than that would be a close north of this month's prior high.
At the end of the day, though, Microsoft stock is still in a well-defined uptrend and is being continually buoyed by its 20-day and 50-day moving averages. Until that ends, this name is a buy-on-dips candidate.
Bulls can stay long the tech giant so long as it holds the $138.40 to $139.50 area. Below this area and Microsoft could fill the gap down to its 20-day moving average and Thursday's closing price at $136.42.
If we get a slight decline in Microsoft stock before it reclaims the $138.40 to $139.50 area, nimble bulls can try a long position, too. So long as MSFT stock is north of $135, though, I would feel comfortable being long the stock. Below and a test of the 50-day is in order.