Microsoft Stock Sets New All-Time High Ahead of Q2 Earnings
Microsoft Stock Sets New All-Time High Ahead of Q2 Earnings
The tech giant reached that milestone amid a broader rally in technology stocks and despite news that a Russian state-backed hacker group accessed the email accounts of Microsoft’s executive team
- Microsoft is set to report earnings on Jan. 30 after the closing bell.
- MSFT will set tone for technology earnings as stock hits fresh ATH.
- Options pricing sees a move of nearly 20 points.
Microsoft hits fresh all-time highs ahead of earnings
Microsoft (MSFT) is scheduled to report fiscal second-quarter earnings results after the closing bell on Jan. 30. Each earnings cycle, Microsoft is one of the first big tech names to report earnings, making it especially important to traders.
The stock hit fresh all-time highs today amid a broader rally in technology stocks despite news that a Russian state-backed hacker group accessed the email accounts of Microsoft’s executive team and other entities, according to a press release from Microsoft.
What do investors expect?
Analysts see Microsoft’s second quarter adjusted earnings per share (EPS) at $2.78 on $61.1 billion in revenue. Those numbers represent year-over-year growth rates of 20% and 16%, according to Bloomberg,.
Intelligent cloud services revenue, which includes Azure, is expected to grow 17.5% from a year ago at $25.3 billion. Productivity and business processes, the segment that includes Office 365 subscriptions and LinkedIn, is slightly less optimistic, with analysts expecting 12% growth from a year ago to $19.03 billion. Personal computing is expected to bring in $16.8 billion for an 18% year-over-year growth rate.
Several analysts upgraded or reaffirmed their bullish views on Microsoft ahead of the earnings announcement, driven in large part by optimism over generative artificial intelligence. Of the 65 analysts tracked by Bloomberg, 60 hold a buy rating on the stock, while five have hold ratings. The 12-month price target among those analysts is $426.46 per share, representing a 7.2% increase from Monday’s opening price.
Trading Microsoft earnings
Trading earnings announcements always comes with uncertainty. MSFT currently holds an implied volatility rank (IVR) of 52.1, and the Feb. 2 expiration strike shows an expected move of +/- 18.43. Still, traders who want a defined risk approach could use selling a call spread or put spread with their strikes around the distance or slightly beyond the expected moves.
Technically, MSFT is trading above its key moving averages and has no areas of prior price action at these levels. The relative strength index (RSI) is trending lower within overbought levels, which may indicate a pullback is due. A drop to levels around the recent consolidation zone from 365 to 378 might be in the cards ahead of earnings. That said, traders looking to take a bullish position before the announcement might want to wait a few more days to see if prices fall.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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