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ETFs That Are in Focus Ahead of Microsoft's Q1 Earnings
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Microsoft (MSFT - Free Report) is set to release first-quarter fiscal 2025 results on Oct. 30 after market close. It is worth taking a look at this leading software company’s fundamentals ahead of its results.
After the bouts of huge sell-offs in July and August, Microsoft has reversed all the losses and trading with flat returns over the past three months. However, the sector has gained 4.4% in the same time frame. The software maker has a reasonable chance of beating estimates in the reported quarter. As such, ETFs having double-digit exposure to this software leader are currently in focus (read: How to Play Mag 7 Earnings).
These are T-Rex 2X Long Microsoft Daily Target ETF (MSFX - Free Report) , iShares Global Tech ETF (IXN - Free Report) , iShares Dow Jones US Technology ETF (IYW - Free Report) , Vanguard Information Technology ETF (VGT - Free Report) and MSCI Information Technology Index ETF (FTEC - Free Report) .
Image Source: Zacks Investment Research
Earnings Whispers
Microsoft has an Earnings ESP of +0.35% and a Zacks Rank #3 (Hold). According to our methodology, the combination of a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
This software maker has witnessed no earnings estimate revision over the past 30 days for the first quarter of fiscal 2025. Microsoft’s earnings surprise history is good, as it delivered an earnings surprise of 6.34%, on average, in the last four quarters. The company is expected to post substantial earnings growth of 3% and revenue growth of 14% in the to-be-reported quarter.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Microsoft Corporation Price, Consensus and EPS Surprise
Wall Street analysts have an average recommendation of 1.23 (made by 39 brokerage firms) on a scale of 1 to 5 (Strong Buy to Strong Sell), up from 1.18 a month ago. Of them, 33 are Strong Buy and 3 are Buys. Strong Buy and Buy account for 84.62% and 7.69% of all recommendations, respectively. Based on short-term price targets offered by 37 analysts, the average price target for Microsoft comes to $503.16. The forecasts range from a low of $448.00 to a high of $600.00 (read: Can Q3 Earnings Fuel a New Rally in "Mag 7" ETFs?).
MSFT has a solid Growth Score of B and falls under a top-ranked Zacks industry (top 27%), indicating that the software maker is primed for growth in the weeks ahead. At current levels, Microsoft's stock trades at 32.87X forward earnings, a premium to the Zacks Computer-Software industry average of 29.78X.
What to Watch
The world's largest software company is spending billions to construct new data centers to meet demand for cloud computing and power-hungry AI services. Investors will closely watch the signs of whether the massive wave of AI investment by MSFT is paying off.
While Azure growth will continue to slow down in the current quarter, chief financial officer Amy Hood said that investments in data centers and servers will let the company capitalize on demand and accelerate Azure growth in the second half of fiscal 2025. Microsoft expects revenues of $63.8-$64.8 billion for the first quarter of fiscal 2025, implying 13.8% growth at the middle of the range.
ETFs With Exposure to MSFT Stock in Focus
T-Rex 2X Long Microsoft Daily Target ETF (MSFX - Free Report)
T-Rex 2X Long Microsoft Daily Target ETF seeks to magnify (200%) the daily performance of the stock of Microsoft. It charges 1.05% in annual fees and has accumulated $7.4 million in its asset base (read: Big 5 Earnings Ahead: Are Single-Stock ETFs Set for Big Gains?).
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 117 stocks in its basket, Microsoft occupies the second spot with a 17.1% share. iShares Global Tech ETF has amassed $5.2 billion in its asset base and trades in a good volume of 176,000 shares a day, on average. The expense ratio is 0.41%.
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 140 securities in its basket. Of these, Microsoft occupies the third position in the basket, with 14.6% of the assets. iShares Dow Jones US Technology ETF has AUM of $19.1 billion and charges 39 bps in fees and expenses. Volume is good as it exchanges nearly 651,000 shares a day. IYW has a Zacks ETF Rank #1 with a Medium risk outlook.
Vanguard Information Technology ETF manages about $79.1 billion in its asset base and provides exposure to 316 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, MSFT occupies the top position with a 14% share. Vanguard Information Technology ETF has an expense ratio of 0.10%, while volume is solid at nearly 393,000 shares. It has a Zacks ETF Rank #1 with a Medium risk outlook.
MSCI Information Technology Index ETF is home to 299 technology stocks with AUM of $12.4 billion. It follows the MSCI USA IMI Information Technology Index. Microsoft is the third firm with a 16.614% allocation. MSCI Information Technology Index ETF has 0.08% in expense ratio, while volume is solid at 195,000 shares a day. It carries a Zacks ETF Rank #1 with a Medium risk outlook.
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ETFs That Are in Focus Ahead of Microsoft's Q1 Earnings
Microsoft (MSFT - Free Report) is set to release first-quarter fiscal 2025 results on Oct. 30 after market close. It is worth taking a look at this leading software company’s fundamentals ahead of its results.
After the bouts of huge sell-offs in July and August, Microsoft has reversed all the losses and trading with flat returns over the past three months. However, the sector has gained 4.4% in the same time frame. The software maker has a reasonable chance of beating estimates in the reported quarter. As such, ETFs having double-digit exposure to this software leader are currently in focus (read: How to Play Mag 7 Earnings).
These are T-Rex 2X Long Microsoft Daily Target ETF (MSFX - Free Report) , iShares Global Tech ETF (IXN - Free Report) , iShares Dow Jones US Technology ETF (IYW - Free Report) , Vanguard Information Technology ETF (VGT - Free Report) and MSCI Information Technology Index ETF (FTEC - Free Report) .
Image Source: Zacks Investment Research
Earnings Whispers
Microsoft has an Earnings ESP of +0.35% and a Zacks Rank #3 (Hold). According to our methodology, the combination of a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
This software maker has witnessed no earnings estimate revision over the past 30 days for the first quarter of fiscal 2025. Microsoft’s earnings surprise history is good, as it delivered an earnings surprise of 6.34%, on average, in the last four quarters. The company is expected to post substantial earnings growth of 3% and revenue growth of 14% in the to-be-reported quarter.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Microsoft Corporation Price, Consensus and EPS Surprise
Microsoft Corporation price-consensus-eps-surprise-chart | Microsoft Corporation Quote
Wall Street analysts have an average recommendation of 1.23 (made by 39 brokerage firms) on a scale of 1 to 5 (Strong Buy to Strong Sell), up from 1.18 a month ago. Of them, 33 are Strong Buy and 3 are Buys. Strong Buy and Buy account for 84.62% and 7.69% of all recommendations, respectively. Based on short-term price targets offered by 37 analysts, the average price target for Microsoft comes to $503.16. The forecasts range from a low of $448.00 to a high of $600.00 (read: Can Q3 Earnings Fuel a New Rally in "Mag 7" ETFs?).
MSFT has a solid Growth Score of B and falls under a top-ranked Zacks industry (top 27%), indicating that the software maker is primed for growth in the weeks ahead. At current levels, Microsoft's stock trades at 32.87X forward earnings, a premium to the Zacks Computer-Software industry average of 29.78X.
What to Watch
The world's largest software company is spending billions to construct new data centers to meet demand for cloud computing and power-hungry AI services. Investors will closely watch the signs of whether the massive wave of AI investment by MSFT is paying off.
While Azure growth will continue to slow down in the current quarter, chief financial officer Amy Hood said that investments in data centers and servers will let the company capitalize on demand and accelerate Azure growth in the second half of fiscal 2025. Microsoft expects revenues of $63.8-$64.8 billion for the first quarter of fiscal 2025, implying 13.8% growth at the middle of the range.
ETFs With Exposure to MSFT Stock in Focus
T-Rex 2X Long Microsoft Daily Target ETF (MSFX - Free Report)
T-Rex 2X Long Microsoft Daily Target ETF seeks to magnify (200%) the daily performance of the stock of Microsoft. It charges 1.05% in annual fees and has accumulated $7.4 million in its asset base (read: Big 5 Earnings Ahead: Are Single-Stock ETFs Set for Big Gains?).
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 117 stocks in its basket, Microsoft occupies the second spot with a 17.1% share. iShares Global Tech ETF has amassed $5.2 billion in its asset base and trades in a good volume of 176,000 shares a day, on average. The expense ratio is 0.41%.
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 140 securities in its basket. Of these, Microsoft occupies the third position in the basket, with 14.6% of the assets. iShares Dow Jones US Technology ETF has AUM of $19.1 billion and charges 39 bps in fees and expenses. Volume is good as it exchanges nearly 651,000 shares a day. IYW has a Zacks ETF Rank #1 with a Medium risk outlook.
Vanguard Information Technology ETF (VGT - Free Report)
Vanguard Information Technology ETF manages about $79.1 billion in its asset base and provides exposure to 316 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, MSFT occupies the top position with a 14% share. Vanguard Information Technology ETF has an expense ratio of 0.10%, while volume is solid at nearly 393,000 shares. It has a Zacks ETF Rank #1 with a Medium risk outlook.
MSCI Information Technology Index ETF (FTEC - Free Report)
MSCI Information Technology Index ETF is home to 299 technology stocks with AUM of $12.4 billion. It follows the MSCI USA IMI Information Technology Index. Microsoft is the third firm with a 16.614% allocation. MSCI Information Technology Index ETF has 0.08% in expense ratio, while volume is solid at 195,000 shares a day. It carries a Zacks ETF Rank #1 with a Medium risk outlook.