Microsoft (NASDAQ: MSFT) is testing a critical support level at $385. Wolfe Research analysts caution that failure to maintain this support could initiate a significant drop of 15 to 20 percent down to the $315 to $335 range.

Market sentiment remains pressured due to broader weakness among AI stocks, disappointing earnings reactions, and mounting competition. These factors contribute to increasing scrutiny around Microsoft’s valuation and market positioning.

Investors should watch closely as the stock approaches this pivotal support level. The implications of breaking through could have significant ramifications for Microsoft and its future direction.

In summary, Microsoft must stabilize above $385 to avoid a marked downturn. Observing market dynamics will be crucial for stakeholders.