Will the Xbox One X give Microsoft a boost?

With the Xbox One X due for release, could this be a good time to buy Microsoft shares?

Microsoft logo
Source: Bloomberg

Microsoft have unveiled their most powerful console to date with the Xbox One X which provides hardened followers with the opportunity to really take advantage of recent ‘4k’ technology. With this in mind, investors will wonder whether the release of this console will provide a boost to Microsoft shares.

Nintendo was the last firm to release a console, with the Switch providing shares with a boost upon its release. However, the best example to follow here is the release of the PS4 Pro. Like the Xbox One X, the PS4 Pro is an update to the previous console rather than a whole new entity. It is more about providing greater processing power, greater graphics, and the ability to maximize the latest 4k technology.

The PS4 Pro was released in November 2016, following the incredible success of the PS4 unit. However, while the PS4 continued to sell well, the new Pro console was somewhat underwhelming in its take up. This will certainly be partly attributed to the fact that 4k TVs are not necessarily the norm yet and the need to have an expensive TV before you even buy the PS4 is a barrier for many gamers. There was also a push in users buying the original console owing to the price drop that typically comes when a successor is released. Keeping this in mind, it is worth tempering expectations of a bonanza launch. Watch out for the sales numbers for the new console, but much like Sony, it could be the old console which will benefit from sales.

Looking at the Microsoft chart, we have seen a nice pullback over the past fortnight, with the price falling into the 50-day simple moving average (SMA). This indicator has provided strong support on a number of occasions over the past year and thus it comes as no surprise that we saw the same thing happen last week.

Microsoft daily chart

On the four-hour chart, we can see the potential for a bullish double bottom formation, which would come in the event of a break through 7108. Given the wider context, a break through 7108 is more expected than a bearish move back below 6880. As long as the price remains above that level, further upside seems the likeliest event. At which point, new all-time highs seem highly likely.

Microsoft four-hour chart

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.