Microsoft Stock News: An Algorithmic Analysis

Microsoft stock has been bullish since the appointment of their new CEO, Satya Nadella. For years, the company missed out on new opportunities as they stuck to their past strategy. As a result, their stock price was stagnant and they slowly lost their dominance of the PC market. Nadella has attempted to transition the company, and investors have so far been buying in.

Microsoft Stock news

Once a PC monopoly, Microsoft has slowly lost their dominance of the market since the Justice Department and European Commission found the company in violation of trust laws. When forced to compete fairly, the once feared tech-giant was revealed to be a middling software writer and a mediocre competitor. Under Steve Ballmer, they were unable to respond to market opportunities or consumer needs quick enough. Two of the biggest chances they were too slow to take advantage of were the smartphone and tablet markets. As users have started browsing on mobile more and more, Microsoft has seen decreasing PC sales, and Ballmer missed the moving tectonic plates of technology and made ill-advised acquisitions.

All of this led to him stepping aside and Nadella being appointed CEO in February 2014. Since that time, the stock has increased 31.25%. Ballmer always called Microsoft a devices and services firm. While this description helped start the company’s transformation, Nadella moved Microsoft towards being the productivity and platform company of the mobile-first and cloud-first world.

stock price

Investors were happy with the changes, as can be seen in the stock price. Some action taken by Nadella and Microsoft since this shift in strategy have been moving from the on-premise market to the cloud services market, acquiring Nokia to become a potent mobile player, growing its database online to challenge other cloud companies’ supremacy, and partnering with software players to increase its presence in the cloud and mobile markets.

I Know First is a financial services firm that utilizes an advanced self-learning algorithm to analyze, model and predict the stock market. The algorithm produces a forecast with a signal and a predictability indicator.  The signal is the number in the middle of the box. The predictability is the number at the bottom of the box.  At the top, a specific asset is identified. This format is consistent across all predictions.

The signal represents the predicted movement direction or trend, and is not a percentage or specific target price. The signal strength indicates how much the current price deviates from what the system considers an equilibrium or “fair” price. The signal can have a positive (predicted increase) or negative (predicted decline) sign. The heat map is arranged according to the signal strength with strongest up signals at the top, while down signals are at the bottom. The table colors are indicative of the signal. Green corresponds to the positive signal and red indicates a negative signal. A deeper color means a stronger signal and a lighter color equals a weaker signal.

The predictability indicator measures the importance of the signal. The predictability is the historical correlation between the prediction and the actual market movement for that particular asset, which is recalculated daily. Theoretically the predictability ranges from minus one to plus one. The higher this number is the more predictable the particular asset is. If you compare predictability for different time ranges, you’ll find that the longer time ranges have higher predictability. This means that longer-range signals are more important and tend to be more accurate.

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The above forecast is for the one-year time horizon. On December 24th, 2013, Microsoft had a signal strength of 0.67, meaning the stock price was predicted to increase. In accordance with the algorithm, the stock price of Microsoft increased 35.07% over that time period.