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Cloud & AI Power Microsoft's Fiscal Q3 Earnings: ETFs to Tap
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Microsoft (MSFT - Free Report) spread optimism on Wall Street after reporting its blowout third-quarter fiscal 2025 results. It beat earnings and revenue estimates, driven by strong cloud computing and artificial intelligence (AI) growth. MSFT shares jumped as much as 8% in after-market hours, adding more than $200 billion to its market value (see: all the Technology ETFs here).
Investors should tap Microsoft's growth with ETFs having double-digit exposure to the software leader. These include iShares Dow Jones US Technology ETF (IYW - Free Report) , MSCI Information Technology Index ETF (FTEC - Free Report) , Vanguard Information Technology ETF (VGT - Free Report) , iShares Top 20 U.S. Stocks ETF (TOPT - Free Report) and Technology Select Sector SPDR Fund (XLK - Free Report) .
Earnings in Focus
Earnings per share came in at $3.43, which beat the Zacks Consensus Estimate of $3.20 and improved 18% from the year-ago earnings. Revenues grew 13% year over year to $70.07 billion, edging past the consensus estimate of $68.38 billion. Strong demand for Cloud services and AI infrastructure drove the performance.
Intelligent Cloud revenues jumped 21% year over year to $26.8 billion, while Microsoft Cloud revenue rose 20% year over year to $42.4 billion. Sales of Office 365 Commercial and Dynamic 365 climbed 12% and 16%, respectively. Sales of the flagship Azure computing platform grew 33% year over year.
Microsoft is one of the biggest beneficiaries of the AI boom. It has been pouring billions into building its AI infrastructure and expanding its data-center footprint. On a call with analysts, chief financial officer Amy Hood said Azure will grow as much as 35%, adjusting for currency fluctuations, during the ongoing quarter (read: Tariff Relief Talks Lift Tech ETFs, Stocks: What's Ahead?).
The software maker expects revenues of $70 billion and earnings per share of $3.46 for the fiscal fourth quarter of 2025.
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 139 securities in its basket. Of these, Microsoft occupies the second position in the basket, with 15.2% of the assets. iShares U.S. Technology ETF has AUM of $17.8 billion and charges 39 bps in fees and expenses. Volume is good as it exchanges nearly 1 million shares a day. IYW has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: Tech Sizzled Last Week: Top-Performing ETFs in the Sector).
MSCI Information Technology Index ETF is home to 296 technology stocks with AUM of $11.5 billion. It follows the MSCI USA IMI Information Technology Index. Microsoft is the third firm with a 13.9% allocation. MSCI Information Technology Index ETF has 0.08% in expense ratio, while volume is solid at 548,000 shares a day. It carries a Zacks ETF Rank #1 with a Medium risk outlook.
Vanguard Information Technology ETF manages about $76.7 billion in its asset base and provides exposure to 310 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, MSFT occupies the third position with a 13.8% share. Vanguard Information Technology ETF has an expense ratio of 0.09%, while volume is solid at nearly 1 million shares. It has a Zacks ETF Rank #1 with a Medium risk outlook.
iShares Top 20 U.S. Stocks ETF offers exposure to the potential growth of mega-cap stocks, which may benefit from their scale and resources. It tracks the S&P 500 Top 20 Select Index and holds 21 stocks in its basket, with MSFT taking the second spot at 13.5%. iShares Top 20 U.S. Stocks ETF has amassed $205.8 million in its asset base and charges 20 bps in annual fees. It trades in an average daily volume of 396,000 shares.
Select Sector SPDR Technology ETF is the most popular and liquid ETF in the technology space, with AUM of $64.4 billion and an average daily volume of 8 million shares. It offers broad exposure to the technology sector and follows the Technology Select Sector Index. Select Sector SPDR Technology ETF holds about 69 securities in its basket, with Microsoft occupying the second position at 13.5%. Select Sector SPDR Technology ETF charges 8 bps in fees per year from investors. It has a Zacks ETF Rank #1 with a Medium risk outlook.
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Cloud & AI Power Microsoft's Fiscal Q3 Earnings: ETFs to Tap
Microsoft (MSFT - Free Report) spread optimism on Wall Street after reporting its blowout third-quarter fiscal 2025 results. It beat earnings and revenue estimates, driven by strong cloud computing and artificial intelligence (AI) growth. MSFT shares jumped as much as 8% in after-market hours, adding more than $200 billion to its market value (see: all the Technology ETFs here).
Investors should tap Microsoft's growth with ETFs having double-digit exposure to the software leader. These include iShares Dow Jones US Technology ETF (IYW - Free Report) , MSCI Information Technology Index ETF (FTEC - Free Report) , Vanguard Information Technology ETF (VGT - Free Report) , iShares Top 20 U.S. Stocks ETF (TOPT - Free Report) and Technology Select Sector SPDR Fund (XLK - Free Report) .
Earnings in Focus
Earnings per share came in at $3.43, which beat the Zacks Consensus Estimate of $3.20 and improved 18% from the year-ago earnings. Revenues grew 13% year over year to $70.07 billion, edging past the consensus estimate of $68.38 billion. Strong demand for Cloud services and AI infrastructure drove the performance.
Intelligent Cloud revenues jumped 21% year over year to $26.8 billion, while Microsoft Cloud revenue rose 20% year over year to $42.4 billion. Sales of Office 365 Commercial and Dynamic 365 climbed 12% and 16%, respectively. Sales of the flagship Azure computing platform grew 33% year over year.
Microsoft is one of the biggest beneficiaries of the AI boom. It has been pouring billions into building its AI infrastructure and expanding its data-center footprint. On a call with analysts, chief financial officer Amy Hood said Azure will grow as much as 35%, adjusting for currency fluctuations, during the ongoing quarter (read: Tariff Relief Talks Lift Tech ETFs, Stocks: What's Ahead?).
The software maker expects revenues of $70 billion and earnings per share of $3.46 for the fiscal fourth quarter of 2025.
ETFs in Focus
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 139 securities in its basket. Of these, Microsoft occupies the second position in the basket, with 15.2% of the assets. iShares U.S. Technology ETF has AUM of $17.8 billion and charges 39 bps in fees and expenses. Volume is good as it exchanges nearly 1 million shares a day. IYW has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: Tech Sizzled Last Week: Top-Performing ETFs in the Sector).
MSCI Information Technology Index ETF (FTEC - Free Report)
MSCI Information Technology Index ETF is home to 296 technology stocks with AUM of $11.5 billion. It follows the MSCI USA IMI Information Technology Index. Microsoft is the third firm with a 13.9% allocation. MSCI Information Technology Index ETF has 0.08% in expense ratio, while volume is solid at 548,000 shares a day. It carries a Zacks ETF Rank #1 with a Medium risk outlook.
Vanguard Information Technology ETF (VGT - Free Report)
Vanguard Information Technology ETF manages about $76.7 billion in its asset base and provides exposure to 310 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, MSFT occupies the third position with a 13.8% share. Vanguard Information Technology ETF has an expense ratio of 0.09%, while volume is solid at nearly 1 million shares. It has a Zacks ETF Rank #1 with a Medium risk outlook.
iShares Top 20 U.S. Stocks ETF (TOPT - Free Report)
iShares Top 20 U.S. Stocks ETF offers exposure to the potential growth of mega-cap stocks, which may benefit from their scale and resources. It tracks the S&P 500 Top 20 Select Index and holds 21 stocks in its basket, with MSFT taking the second spot at 13.5%. iShares Top 20 U.S. Stocks ETF has amassed $205.8 million in its asset base and charges 20 bps in annual fees. It trades in an average daily volume of 396,000 shares.
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 $64.4 billion and an average daily volume of 8 million shares. It offers broad exposure to the technology sector and follows the Technology Select Sector Index. Select Sector SPDR Technology ETF holds about 69 securities in its basket, with Microsoft occupying the second position at 13.5%. Select Sector SPDR Technology ETF charges 8 bps in fees per year from investors. It has a Zacks ETF Rank #1 with a Medium risk outlook.