Microsoft Corp stated it looks forward to providing the US administration with additional information following the suspension of the permanent residency program. The tech giant emphasized that vast majority of its US workforce are American citizens.

Compensation and workforce composition

The company clarified its stance on employee compensation, noting that it pays H-1B visa holders the same as any other employees performing comparable work. This statement addresses concerns regarding wage disparities in the technology sector.

Microsoft highlighted that about 80% of H-1B visa applications it submitted in the last fiscal year were to extend or change the status of existing employees. This indicates that the majority of applications were not for new foreign hires but for retaining current staff.

Regulatory context

The response comes amid heightened scrutiny of immigration programs by the US government. Microsoft's communication focuses on compliance and the nature of its visa applications, aiming to provide clarity to regulatory bodies.

The firm reiterated that its workforce demographics reflect a significant proportion of domestic talent, countering narratives that suggest over-reliance on foreign labor for core roles.

Microsoft Corp shares traded slightly lower on Thursday as technology stocks declined amid cautious market sentiment. The Nasdaq fell 0.48%, while the S&P 500 lost 0.20%. Microsoft shares were down 0.09% at $529.26 at the time of publication.

Gaming empire faces fresh EU probe

Reuters reported that Italy’s antitrust authority launched an EU-backed investigation into several Microsoft-owned gaming companies, including Activision Blizzard, over their use of in-game virtual currencies. The probe focuses on whether complex currency conversions obscure the actual cost of digital purchases and violate EU consumer protection rules, particularly those protecting minors.

Italy will lead the investigation alongside regulators from Norway and Denmark. The investigation forms part of a broader initiative coordinated by the EU’s Consumer Protection Cooperation Network. Last month, the network launched actions against nine gaming companies, including Riot Games Inc., a subsidiary of Tencent Holdings Limited, Ubisoft Entertainment SA, and Supercell Oy, also owned by Tencent. It had previously initiated a separate action involving Activision Blizzard.

Technical indicators show mixed signals

Microsoft remains in a long-term uptrend, trading above its major moving averages. The stock is 4.4% above its 20-day simple moving average (SMA) of $508.55 and 22.4% above its 200-day SMA of $433.80. A golden cross formed in August, reinforcing the bullish trend.

However, Microsoft’s relative strength index (RSI) stands at 70.76. Readings above 70 indicate overbought conditions, suggesting a potential pullback or consolidation. Key resistance stands at $553.50, near the 52-week high of $553.72. Investors are watching support around the 50-day SMA of $498.94, followed by $486.

Earnings and analyst outlook

Microsoft is scheduled to report quarterly earnings on October 28. Analysts expect earnings of $4.73 per share, up from $4.13 a year earlier. Revenue is projected to reach $90.64 billion, compared with $77.67 billion a year ago.

The stock carries a Buy consensus rating, with an average price forecast of $578.32. Recent price target adjustments include:

What the numbers show

A divergence exists between Microsoft’s strong fundamental growth metrics and its valuation scores. The company boasts a Growth score of 96.91 and a Quality score of 86.67, indicating robust operational performance. However, its Value score is only 19.3, suggesting the stock is relatively expensive. This combination implies that while the business fundamentals are strong, the current price may already reflect much of this growth, potentially increasing downside risks during broader market declines.

ETF exposure

Microsoft has significant weightings in several ETFs, which can influence share demand based on fund flows:

• Vanguard Growth ETF: 9.59%
• Technology Select Sector SPDR Fund: 9.83%
• iShares Core S&P U.S. Growth ETF: 9.75%