In a stunning development on Thursday, Microsoft’s MSFT stock hit an all-time high, boosted by the announcement of a new AI assistant, Microsoft Copilot for Security. The launch significantly strengthened the company’s position on the stock market, with the stock reaching a new record high.
Investors could take advantage of the software leader’s strength through ETFs that have double-digit exposure to Microsoft, e.g Select the Sector SPDR Technology ETF XLK, MSCI Information Technology Index ETF FTEC, iShares Global Tech ETF IXN, Vanguard Information Technology ETF VGT i iShares Dow Jones US Technology ETF YAY.
The company introduced Microsoft Copilot for security, which will be a universally available tool starting April 1. This generative AI assistant is designed to support security and IT professionals in protecting their operations from cyber threats by leveraging a vast database of threats.
Offering tailored insights and actionable recommendations, Copilot for Security is capable of handling queries and delivering responses in eight languages, with a multilingual interface supporting 25 languages. This innovation is considered a significant growth driver for Microsoft, especially in the cybersecurity segment.
Microsoft is benefiting greatly from generative artificial intelligence (AI). In January, Apple overtook AAPL to become the most valuable company in the world. Microsoft now has a market cap of more than $3 trillion (read: AI Powers Microsoft’s Q2 Earnings: Top ETF Picks).
The bulls are here!
Wall Street is bullish on stocks. Microsoft currently has an average broker recommendation (ABR) of 1.14 on a scale of 1 to 5 (strong buy to strong sell), calculated based on actual recommendations (buy, hold, sell, etc.) given 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 issued by the current ABR, 33 are Strong Buys and three are Buys. Strong buy and buy account for 89.19% and 8.11% of all recommendations, respectively. A month ago, Strong Buy accounted for 89.19%, while Buy represented 8.11%.
Based on short-term price targets provided by 34 analysts, the average target price for Microsoft is $445.06. Predictions range from a low of $298.10 to a high of $600.00. The average target price represents a 5% upside from the last close price of $425.22.
Solid earnings estimate revisions
Microsoft posted a positive revision to its earnings estimate of 3 cents last month for the fiscal year (ending in June 2024), with earnings growth estimated at 18.5%. This compares favorably to the industry growth projection of 12.61%.
MSFT has a Zacks Rank #2 (Buy) and belongs to the best-ranked Zacks industry (18%), indicating further growth.
Touch ETFs
Select Sector SPDR Technology ETF (XLK)
The Select Sector SPDR Technology ETF is the most popular and liquid ETF in the technology space, with AUM of $65.1 billion and average daily volume of 6.7 million shares. It offers broad exposure to the technology sector and tracks the Select Technology Sector Index. The Select Sector SPDR Technology ETF holds about 64 securities in its basket, with Microsoft taking the top spot at 23.3%.
The Select Sector SPDR Technology ETF charges investors 9 bps in fees annually 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)
The 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 first company with a distribution of 21.1%.
The MSCI Information Technology Index ETF has a 0.08% expense ratio, while volume is solid at 256,000 shares per day. It carries a Zacks ETF Rank #1 with medium risk.
iShares Global Tech ETF (IXN)
The iShares Global Tech ETF provides exposure to electronics, computer software and hardware, and information 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 takes the top spot with a 20% stake.
The iShares Global Tech ETF has amassed $4.6 billion in its asset base and trades a healthy volume of 387,000 shares per day, on average. The expense ratio is 0.41%.
Vanguard Information Technology ETF (VGT)
The Vanguard Information Technology ETF manages about $66.4 billion in assets and provides exposure to 315 technology stocks. It currently tracks the MSCI US Investable Market Information Technology Index 25/50 Index. Here MSFT ranks second with 18.2% share.
The Vanguard Information Technology ETF has a 0.10% expense ratio, while volume is solid with nearly 490,000 shares. It has a Zacks ETF Rank #1 with a medium-risk outlook (read: 5 ETFs Investors Loved in February).
iShares US Technology ETF (IYW)
The iShares US Technology ETF provides exposure to US electronics, computer software and hardware, and information technology companies. It tracks the Russell 1000 Technology RIC 22.5/45 Capped Index, holding 133 securities in its basket. Of this, Microsoft takes second place in the basket with 17.3% of assets.
The iShares Dow Jones US Technology ETF has AUM of $16.1 billion and charges 40 bps in fees and expenses. Volume is good as almost 723,000 shares are traded daily. IYW has a Zacks ETF Rank #1 with a medium risk outlook.
Want the latest recommendations from Zacks Investment Research? Today you can download the 7 best stocks for the next 30 days. Click to get this free report
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
Fidelity MSCI Information Technology Index ETF (FTEC): ETF Research Reports
iShares US Technology ETF (IYW): ETF Research Reports
Vanguard Information Technology ETF (VGT): ETF Research Reports
iShares Global Tech ETF (IXN): ETF Research Reports
To read this article on Zacks.com, click here.
Zacks Investment Research