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In a remarkable development on Thursday, Microsoft's (MSFT - Free Report) stock reached an unprecedented high, driven by the announcement of its new artificial intelligence assistant, Microsoft Copilot for Security. The launch has significantly bolstered the company's position in the stock market, with shares hitting a new record high.
Investors could tap the strength of this software leader through ETFs having double-digit exposure to Microsoft, like 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 introduced Microsoft Copilot for Security, which will be a universally accessible tool starting Apr 1. This generative AI assistant is designed to support security and IT professionals in safeguarding their operations against cyber threats by leveraging a vast database of threat intelligence.
Offering custom insights and action recommendations, Copilot for Security is capable of handling prompts and delivering responses in eight languages, with a multilingual interface accommodating 25 languages. This innovation is seen as a significant growth driver for Microsoft, especially within its cybersecurity segment.
Microsoft is benefiting big from generative artificial intelligence (AI). It overtook Apple (AAPL - Free Report) in January to become the world's most valuable company. Microsoft now has a market capitalization of more than $3 trillion (read: AI Drives Microsoft's Q2 Earnings: Top ETF Picks).
Bulls Are Here!
Wall Street is bullish on the stock. Microsoft currently has an average brokerage recommendation (ABR) of 1.14 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell etc.) made by 37 brokerage firms. The current ABR compares to an ABR of 1.14 a month ago based on 37 recommendations.
Of the 37 recommendations deriving the current ABR, 33 are Strong Buy and three are Buy. Strong Buy and Buy, respectively, account for 89.19% and 8.11% of all recommendations. A month ago, Strong Buy made up 89.19%, while Buy represented 8.11%.
Based on short-term price targets offered by 34 analysts, the average price target for Microsoft comes to $445.06. The forecasts range from a low of $298.10 to a high of $600.00. The average price target represents an increase of 5% from the last closing price of $425.22.
Solid Earnings Estimate Revisions
Microsoft saw a positive earnings estimate revision of 3 cents over the past month for the fiscal year (ending June 2024), with an estimated earnings growth of 18.5%. This compares favorably with the industry’s growth projection of 12.61%.
MSFT has a Zacks Rank #2 (Buy) and falls under a top-ranked Zacks industry (top 18%), suggesting further growth.
Select Sector SPDR Technology ETF is the most popular and liquid ETF in the technology space, with AUM of $65.1 billion and an average daily volume of 6.7 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 23.3%.
Select Sector SPDR Technology ETF charges 9 bps in fees per year from investors and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: 4 Best Sector ETFs to Play Now).
MSCI Information Technology Index ETF is home to 302 technology stocks with AUM of $9.4 billion. It follows the MSCI USA IMI Information Technology Index. Microsoft is the top firm with a 21.1% allocation.
MSCI Information Technology Index ETF has 0.08% in expense ratio, while volume is solid at 256,000 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 top spot with a 20% share.
iShares Global Tech ETF has amassed $4.6 billion in its asset base and trades in a good volume of 387,000 shares a day, on average. The expense ratio is 0.41%.
Vanguard Information Technology ETF manages about $66.4 billion in its asset base and provides exposure to 315 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, MSFT occupies the second position with an 18.2% share.
Vanguard Information Technology ETF has 0.10% in expense ratio, while volume is solid at nearly 490,000 shares. It has a Zacks ETF Rank #1 with a Medium risk outlook (read: 5 ETFs That Gained Investors Love in February).
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 133 securities in its basket. Of these, Microsoft occupies the second position in the basket, with 17.3% of the assets.
iShares Dow Jones US Technology ETF has AUM of $16.1 billion and charges 40 bps in fees and expenses. Volume is good as it exchanges nearly 723,000 shares a day. IYW has a Zacks ETF Rank #1 with a Medium risk outlook.
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5 ETFs to Tap Microsoft's Strength
In a remarkable development on Thursday, Microsoft's (MSFT - Free Report) stock reached an unprecedented high, driven by the announcement of its new artificial intelligence assistant, Microsoft Copilot for Security. The launch has significantly bolstered the company's position in the stock market, with shares hitting a new record high.
Investors could tap the strength of this software leader through ETFs having double-digit exposure to Microsoft, like 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 introduced Microsoft Copilot for Security, which will be a universally accessible tool starting Apr 1. This generative AI assistant is designed to support security and IT professionals in safeguarding their operations against cyber threats by leveraging a vast database of threat intelligence.
Offering custom insights and action recommendations, Copilot for Security is capable of handling prompts and delivering responses in eight languages, with a multilingual interface accommodating 25 languages. This innovation is seen as a significant growth driver for Microsoft, especially within its cybersecurity segment.
Microsoft is benefiting big from generative artificial intelligence (AI). It overtook Apple (AAPL - Free Report) in January to become the world's most valuable company. Microsoft now has a market capitalization of more than $3 trillion (read: AI Drives Microsoft's Q2 Earnings: Top ETF Picks).
Bulls Are Here!
Wall Street is bullish on the stock. Microsoft currently has an average brokerage recommendation (ABR) of 1.14 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell etc.) made by 37 brokerage firms. The current ABR compares to an ABR of 1.14 a month ago based on 37 recommendations.
Of the 37 recommendations deriving the current ABR, 33 are Strong Buy and three are Buy. Strong Buy and Buy, respectively, account for 89.19% and 8.11% of all recommendations. A month ago, Strong Buy made up 89.19%, while Buy represented 8.11%.
Based on short-term price targets offered by 34 analysts, the average price target for Microsoft comes to $445.06. The forecasts range from a low of $298.10 to a high of $600.00. The average price target represents an increase of 5% from the last closing price of $425.22.
Solid Earnings Estimate Revisions
Microsoft saw a positive earnings estimate revision of 3 cents over the past month for the fiscal year (ending June 2024), with an estimated earnings growth of 18.5%. This compares favorably with the industry’s growth projection of 12.61%.
MSFT has a Zacks Rank #2 (Buy) and falls under a top-ranked Zacks industry (top 18%), suggesting further growth.
ETFs to Tap
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 $65.1 billion and an average daily volume of 6.7 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 23.3%.
Select Sector SPDR Technology ETF charges 9 bps in fees per year from investors and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: 4 Best Sector ETFs to Play Now).
MSCI Information Technology Index ETF (FTEC - Free Report)
MSCI Information Technology Index ETF is home to 302 technology stocks with AUM of $9.4 billion. It follows the MSCI USA IMI Information Technology Index. Microsoft is the top firm with a 21.1% allocation.
MSCI Information Technology Index ETF has 0.08% in expense ratio, while volume is solid at 256,000 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 top spot with a 20% share.
iShares Global Tech ETF has amassed $4.6 billion in its asset base and trades in a good volume of 387,000 shares a day, on average. The expense ratio is 0.41%.
Vanguard Information Technology ETF (VGT - Free Report)
Vanguard Information Technology ETF manages about $66.4 billion in its asset base and provides exposure to 315 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, MSFT occupies the second position with an 18.2% share.
Vanguard Information Technology ETF has 0.10% in expense ratio, while volume is solid at nearly 490,000 shares. It has a Zacks ETF Rank #1 with a Medium risk outlook (read: 5 ETFs That Gained Investors Love in February).
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 133 securities in its basket. Of these, Microsoft occupies the second position in the basket, with 17.3% of the assets.
iShares Dow Jones US Technology ETF has AUM of $16.1 billion and charges 40 bps in fees and expenses. Volume is good as it exchanges nearly 723,000 shares a day. IYW has a Zacks ETF Rank #1 with a Medium risk outlook.