We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
ETFs to Buy on Solid AI-Fueled Microsoft Q1 Earnings
Read MoreHide Full Article
The world's largest software maker — Microsoft (MSFT - Free Report) — reported strong first-quarter fiscal 2024 results, beating earnings and revenue estimates, thanks to continued growth in its cloud computing businesses. The company provided an upbeat revenue outlook for the current quarter (see: all the Technology ETFs here).
Driven by the earnings beat, shares of MSFT jumped as much as 6% in after-market hours. Investors could tap the strength in this software leader through ETFs having double-digit exposure to Microsoft. These are Select Sector SPDR Technology ETF (XLK - Free Report) , MSCI Information Technology Index ETF (FTEC - Free Report) , iShares Global Tech ETF (IXN - Free Report) , Vanguard Information Technology ETF (VGT - Free Report) and iShares Dow Jones US Technology ETF (IYW - Free Report) .
Earnings in Focus
Earnings per share came in at $2.99, beating the Zacks Consensus Estimate of $2.65 and higher than $2.35 reported in the year-ago quarter. Revenues grew 13% year over year to $56.5 billion, edging past the consensus estimate of $54.4 billion. This marks the strongest sales increase in six quarters, driven by higher demand for its cloud computing services amid growing enthusiasm about artificial intelligence.
Intelligent Cloud revenues jumped 19% year over year. Sales of Office 365 Commercial and Dynamic 365 climbed 18% and 28%, respectively. Sales of the flagship Azure computing platform grew 29% year over year. Azure sales were boosted by the cloud service that lets customers use OpenAI products. The service now caters to 18,000 customers, up from 11,000 in the year-ago quarter.
The world’s largest software maker is optimistic about the long-term prospects of its Azure business, as it expects revenues in this segment to continue its acceleration in the rest of the fiscal year.
Microsoft expects revenues of $60.4-$61.4 billion for fiscal second-quarter 2024, which implies 15% year-over-year growth at the mid-point. The Zacks Consensus Estimate is pegged at $58 billion. Demand for generative AI will continue to fuel Microsoft's cloud business. Earlier this month, Microsoft completed its $68.7 billion acquisition of video game publisher Activision Blizzard (read: ETFs in Focus as Microsoft Closes Activision Deal).
Select Sector SPDR Technology ETF is the most popular and liquid ETF in the technology space, with AUM of $47.4 billion and an average daily volume of 6.3 million shares. It offers broad exposure to the technology sector and follows the Technology Select Sector Index. Select Sector SPDR Technology ETF holds about 64 securities in its basket, with Microsoft occupying the top position at 23.8%.
Select Sector SPDR Technology ETF charges 10 bps in fees per year from investors and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
MSCI Information Technology Index ETF is home to 310 technology stocks with AUM of $6.9 billion. It follows the MSCI USA IMI Information Technology Index. Microsoft is the second firm with a 20.2% allocation.
MSCI Information Technology Index ETF has 0.08% in expense ratio, while volume is solid at 205,000 shares a day. It carries a Zacks ETF Rank #1 with a Medium risk outlook.
iShares Global Tech ETF provides exposure to electronics, computer software and hardware, and informational technology companies by tracking the S&P Global 1200 Information Technology 4.5/22.5/45 Capped Index. Holding 115 stocks in its basket, Microsoft occupies the second spot with a 20.4% share.
iShares Global Tech ETF has amassed $3.4 billion in its asset base and trades in a good volume of 109,000 shares a day, on average. The expense ratio is 0.41%.
Vanguard Information Technology ETF manages about $54.2 billion in its asset base and provides exposure to 319 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, MSFT occupies the second position with a 17% share.
Vanguard Information Technology ETF has 0.10% in expense ratio, while volume is solid at nearly 499,000 shares. It has a Zacks ETF Rank #1 with a Medium risk outlook.
iShares U.S. Technology ETF provides exposure to U.S. electronics, computer software and hardware, and informational technology companies. It tracks the Russell 1000 Technology RIC 22.5/45 Capped Index, holding 134 securities in its basket. Of these, Microsoft occupies the second position in the basket, with 17.2% of the assets (read: 5 Favorite Sectors This Earnings Season and Their ETFs).
iShares Dow Jones US Technology ETF has AUM of $11.5 billion and charges 40 bps in fees and expenses. Volume is good as it exchanges nearly 627,000 shares a day. IYW has a Zacks ETF Rank #1 with a Medium risk outlook.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
ETFs to Buy on Solid AI-Fueled Microsoft Q1 Earnings
The world's largest software maker — Microsoft (MSFT - Free Report) — reported strong first-quarter fiscal 2024 results, beating earnings and revenue estimates, thanks to continued growth in its cloud computing businesses. The company provided an upbeat revenue outlook for the current quarter (see: all the Technology ETFs here).
Driven by the earnings beat, shares of MSFT jumped as much as 6% in after-market hours. Investors could tap the strength in this software leader through ETFs having double-digit exposure to Microsoft. These are Select Sector SPDR Technology ETF (XLK - Free Report) , MSCI Information Technology Index ETF (FTEC - Free Report) , iShares Global Tech ETF (IXN - Free Report) , Vanguard Information Technology ETF (VGT - Free Report) and iShares Dow Jones US Technology ETF (IYW - Free Report) .
Earnings in Focus
Earnings per share came in at $2.99, beating the Zacks Consensus Estimate of $2.65 and higher than $2.35 reported in the year-ago quarter. Revenues grew 13% year over year to $56.5 billion, edging past the consensus estimate of $54.4 billion. This marks the strongest sales increase in six quarters, driven by higher demand for its cloud computing services amid growing enthusiasm about artificial intelligence.
Intelligent Cloud revenues jumped 19% year over year. Sales of Office 365 Commercial and Dynamic 365 climbed 18% and 28%, respectively. Sales of the flagship Azure computing platform grew 29% year over year. Azure sales were boosted by the cloud service that lets customers use OpenAI products. The service now caters to 18,000 customers, up from 11,000 in the year-ago quarter.
The world’s largest software maker is optimistic about the long-term prospects of its Azure business, as it expects revenues in this segment to continue its acceleration in the rest of the fiscal year.
Microsoft expects revenues of $60.4-$61.4 billion for fiscal second-quarter 2024, which implies 15% year-over-year growth at the mid-point. The Zacks Consensus Estimate is pegged at $58 billion. Demand for generative AI will continue to fuel Microsoft's cloud business. Earlier this month, Microsoft completed its $68.7 billion acquisition of video game publisher Activision Blizzard (read: ETFs in Focus as Microsoft Closes Activision Deal).
ETFs in Focus
Select Sector SPDR Technology ETF (XLK - Free Report)
Select Sector SPDR Technology ETF is the most popular and liquid ETF in the technology space, with AUM of $47.4 billion and an average daily volume of 6.3 million shares. It offers broad exposure to the technology sector and follows the Technology Select Sector Index. Select Sector SPDR Technology ETF holds about 64 securities in its basket, with Microsoft occupying the top position at 23.8%.
Select Sector SPDR Technology ETF charges 10 bps in fees per year from investors and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
MSCI Information Technology Index ETF (FTEC - Free Report)
MSCI Information Technology Index ETF is home to 310 technology stocks with AUM of $6.9 billion. It follows the MSCI USA IMI Information Technology Index. Microsoft is the second firm with a 20.2% allocation.
MSCI Information Technology Index ETF has 0.08% in expense ratio, while volume is solid at 205,000 shares a day. It carries a Zacks ETF Rank #1 with a Medium risk outlook.
iShares Global Tech ETF (IXN - Free Report)
iShares Global Tech ETF provides exposure to electronics, computer software and hardware, and informational technology companies by tracking the S&P Global 1200 Information Technology 4.5/22.5/45 Capped Index. Holding 115 stocks in its basket, Microsoft occupies the second spot with a 20.4% share.
iShares Global Tech ETF has amassed $3.4 billion in its asset base and trades in a good volume of 109,000 shares a day, on average. The expense ratio is 0.41%.
Vanguard Information Technology ETF (VGT - Free Report)
Vanguard Information Technology ETF manages about $54.2 billion in its asset base and provides exposure to 319 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, MSFT occupies the second position with a 17% share.
Vanguard Information Technology ETF has 0.10% in expense ratio, while volume is solid at nearly 499,000 shares. It has a Zacks ETF Rank #1 with a Medium risk outlook.
iShares U.S. Technology ETF (IYW - Free Report)
iShares U.S. Technology ETF provides exposure to U.S. electronics, computer software and hardware, and informational technology companies. It tracks the Russell 1000 Technology RIC 22.5/45 Capped Index, holding 134 securities in its basket. Of these, Microsoft occupies the second position in the basket, with 17.2% of the assets (read: 5 Favorite Sectors This Earnings Season and Their ETFs).
iShares Dow Jones US Technology ETF has AUM of $11.5 billion and charges 40 bps in fees and expenses. Volume is good as it exchanges nearly 627,000 shares a day. IYW has a Zacks ETF Rank #1 with a Medium risk outlook.