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Microsoft Up on Solid Q1 Results: Top-Ranked ETFs in Focus

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After the closing bell on Wednesday, the world's largest software maker Microsoft (MSFT - Free Report) once again delighted investors with stellar fiscal first-quarter 2019 results. It topped both revenue and earnings estimates (see: all the Technology ETFs here).

Earnings per share came in at $1.14, easily outpacing the Zacks Consensus Estimate of 96 cents and improving 36% from the year-ago quarter. Revenues rose 19% year over year to $29.08 billion, topping the estimate of $27.73 billion.

The outperformance came despite slowing growth in the cloud computing business.  Azure sales grew 76% in the fiscal first quarter, down from growth of 89% in the previous quarter and 90% in the year-ago quarter. All these reflect the company’s success in shifting its business toward Internet-based computing, which includes products such as Office 365, Dynamic 365 and the flagship Azure computing platform. This has become a major source of growth. Particularly, sales of Office 365 and Dynamic 365 climbed 36% and 51%, respectively.

Shares of Microsoft jumped more than 4% in after-market hours, following the earnings announcement. It is also up more than 4% in pre-market trade at the time of writing.

Currently, Microsoft carries a Zacks Rank #1 (Strong Buy) and has a Growth Score of B. It falls under a top-ranked Zacks industry (top 42%), suggesting that its outperformance is likely to continue (read: Why to Cash in on the Slump & Grab Tech ETFs).

ETFs in Focus

Investors seeking to bet on the strength of this software leader could definitely look into the ETF world. While there are several ETF options available, we have highlighted five top-ranked funds with a double-digit exposure to Microsoft that could be compelling choices.

Select Sector SPDR Technology ETF (XLK - Free Report)

This most-popular technology ETF follows the Technology Select Sector Index and has $20.1 billion in AUM. The fund charges 13 bps in fees per year from investors and trades in heavy volume of around 14.1 million shares a day on average. It holds about 66 securities in its basket, with Microsoft occupying the second position at 17.2%. It has a Zacks ETF Rank #1 with a Medium risk outlook (read: Best ETF Strategies for Q4 & Tech Reshuffle).

iShares Dow Jones US Technology ETF (IYW - Free Report)

This ETF tracks the Dow Jones US Technology Index, giving investors exposure to 152 technology stocks. Out of these, Microsoft occupies the second position in the basket with 14.9% of the assets. The fund has AUM of $4 billion and charges 43 bps in fees and expenses. Volume is good as it exchanges nearly 185,000 shares in hand a day. The fund has a Zacks ETF Rank #1 with a Medium risk outlook.

Vanguard Information Technology ETF (VGT - Free Report)

This fund manages about $20.8 billion in its asset base and provides exposure to 333 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Transition Index. Here, MSFT takes the second spot with 13.5% share. The ETF has 0.10% in expense ratio, while volume is solid at nearly 540,000 shares. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.

MSCI Information Technology Index ETF (FTEC - Free Report)

This fund is home to 341 technology stocks with AUM of $2.4 billion. It follows the MSCI USA IMI Information Technology Index. MSFT is the second firm with an 11.3% allocation. The ETF has 0.08% in expense ratio while volume is solid at 483,000 shares a day. It carries a Zacks ETF Rank #1 with a Medium risk outlook (read: 5 Tech ETFs That Tumbled Most on Broad Market Rout).

Invesco QQQ (QQQ - Free Report)

This ETF provides exposure to the largest domestic and international non-financial companies listed on Nasdaq based on market capitalization. Microsoft accounts for 10.1% share in the basket. It has $68 billion in AUM and charges 20 bps in fees per year. The fund has a Zacks ETF Rank #2 with a Medium risk outlook.

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