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ETFs to Tap on Microsoft's New AI Subscription Drive
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Microsoft (MSFT - Free Report) rallied as much as 6% to an all-time high on Jul 18 after it unveiled a new artificial intelligence (AI) subscription for its Office 365 platform. This has resulted in a remarkable increase of $154 billion in Microsoft's market value, surpassing the valuations of companies such as Morgan Stanley, Intel, Honeywell and hundreds of others in the S&P 500 (read: Microsoft Next to Join $3T Club? ETFs to Benefit)).
Investors could tap the growth 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) .
The company will charge users an additional $30 per month for the use of generative AI with tools such as Teams, Excel and Word. The subscription includes access to Copilot, a generative AI assistant that offers various capabilities, including email ranking, meeting summarization, spreadsheet analysis, writing prompts and presentation design. The company also introduced visual search to Bing Chat, its AI chatbot, allowing users to take or upload a photo and request more information.
The move comes amid the escalating competition in the field of consumer-driven generative AI tools among technology titans like Microsoft, Google (GOOGL) and IBM. Analysts, such as Wedbush's Dan Ives, view Microsoft's AI offerings as a lucrative opportunity, given its early entry into the market and large user base.
Microsoft has been pouring money into generative AI, largely through a multibillion-dollar investment in OpenAI, the creator of ChatGPT. As the market continues to recognize the potential of AI, Microsoft's strategic investments and innovations in this sphere position it at the forefront of this technological revolution. With the ongoing rollout of AI upgrades and the market's growing confidence in AI's transformative potential, Microsoft's shares may continue to soar in the foreseeable future.
Select Sector SPDR Technology ETF is the most popular and liquid ETF in the technology space, with AUM of $51 billion and an average daily volume of 6 million shares. It offers broad exposure to the technology sector and follows the Technology Select Sector Index. Select Sector SPDR Technology ETF holds about 65 securities in its basket, with Microsoft occupying the top position at 23.2%.
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 (see: all the Technology ETFs here).
MSCI Information Technology Index ETF is home to 310 technology stocks with AUM of $7.3 billion. It follows the MSCI USA IMI Information Technology Index. Microsoft is the second firm with a 20.6% allocation.
MSCI Information Technology Index ETF has 0.08% in expense ratio, while volume is solid at 228,000 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 114 stocks in its basket, Microsoft occupies the second spot with a 19.7% share.
iShares Global Tech ETF has amassed $3.8 billion in its asset base and trades in a good volume of 188,000 shares a day, on average. The expense ratio is 0.40%.
Vanguard Information Technology ETF manages about $53.8 billion in its asset base and provides exposure to 322 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, MSFT occupies the second position with a 20.5% share (read: Top-Ranked ETFs to Buy as Goldman Cuts U.S. Recession Forecast).
Vanguard Information Technology ETF has 0.10% in expense ratio, while volume is solid at nearly 495,000 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 136 securities in its basket. Of these, Microsoft occupies the second position in the basket, with 16.6% of the assets.
iShares Dow Jones US Technology ETF has AUM of $13.3 billion and charges 39 bps in fees and expenses. Volume is good as it exchanges nearly 568,000 shares a day. IYW has a Zacks ETF Rank #1 with a Medium risk outlook.
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ETFs to Tap on Microsoft's New AI Subscription Drive
Microsoft (MSFT - Free Report) rallied as much as 6% to an all-time high on Jul 18 after it unveiled a new artificial intelligence (AI) subscription for its Office 365 platform. This has resulted in a remarkable increase of $154 billion in Microsoft's market value, surpassing the valuations of companies such as Morgan Stanley, Intel, Honeywell and hundreds of others in the S&P 500 (read: Microsoft Next to Join $3T Club? ETFs to Benefit)).
Investors could tap the growth 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) .
The company will charge users an additional $30 per month for the use of generative AI with tools such as Teams, Excel and Word. The subscription includes access to Copilot, a generative AI assistant that offers various capabilities, including email ranking, meeting summarization, spreadsheet analysis, writing prompts and presentation design. The company also introduced visual search to Bing Chat, its AI chatbot, allowing users to take or upload a photo and request more information.
The move comes amid the escalating competition in the field of consumer-driven generative AI tools among technology titans like Microsoft, Google (GOOGL) and IBM. Analysts, such as Wedbush's Dan Ives, view Microsoft's AI offerings as a lucrative opportunity, given its early entry into the market and large user base.
Microsoft has been pouring money into generative AI, largely through a multibillion-dollar investment in OpenAI, the creator of ChatGPT. As the market continues to recognize the potential of AI, Microsoft's strategic investments and innovations in this sphere position it at the forefront of this technological revolution. With the ongoing rollout of AI upgrades and the market's growing confidence in AI's transformative potential, Microsoft's shares may continue to soar in the foreseeable future.
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 $51 billion and an average daily volume of 6 million shares. It offers broad exposure to the technology sector and follows the Technology Select Sector Index. Select Sector SPDR Technology ETF holds about 65 securities in its basket, with Microsoft occupying the top position at 23.2%.
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 (see: all the Technology ETFs here).
MSCI Information Technology Index ETF (FTEC - Free Report)
MSCI Information Technology Index ETF is home to 310 technology stocks with AUM of $7.3 billion. It follows the MSCI USA IMI Information Technology Index. Microsoft is the second firm with a 20.6% allocation.
MSCI Information Technology Index ETF has 0.08% in expense ratio, while volume is solid at 228,000 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 114 stocks in its basket, Microsoft occupies the second spot with a 19.7% share.
iShares Global Tech ETF has amassed $3.8 billion in its asset base and trades in a good volume of 188,000 shares a day, on average. The expense ratio is 0.40%.
Vanguard Information Technology ETF (VGT - Free Report)
Vanguard Information Technology ETF manages about $53.8 billion in its asset base and provides exposure to 322 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, MSFT occupies the second position with a 20.5% share (read: Top-Ranked ETFs to Buy as Goldman Cuts U.S. Recession Forecast).
Vanguard Information Technology ETF has 0.10% in expense ratio, while volume is solid at nearly 495,000 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 136 securities in its basket. Of these, Microsoft occupies the second position in the basket, with 16.6% of the assets.
iShares Dow Jones US Technology ETF has AUM of $13.3 billion and charges 39 bps in fees and expenses. Volume is good as it exchanges nearly 568,000 shares a day. IYW has a Zacks ETF Rank #1 with a Medium risk outlook.