ETFs in Focus as Microsoft Q1 Earnings Beat, Cloud Growth Slows

The world's largest software maker — Microsoft MSFT — reported its first-quarter fiscal 2025 results, wherein it beat earnings and revenue estimates but offered a downbeat guidance (see: all the Technology ETFs here). 

The stock lost about 4% in after-market hours. ETFs with double-digit exposure to this software leader are in focus. These include T-Rex 2X Long Microsoft Daily Target ETF MSFX, iShares Global Tech ETF (IXN), iShares Dow Jones US Technology ETF IYW, Vanguard Information Technology ETF VGT and MSCI Information Technology Index ETF FTEC.

Earnings in Focus

Earnings per share came in at $3.30, beating the Zacks Consensus Estimate of $3.08 and improving 10% from the year-ago quarter. Revenues grew 16% year over year to $65.6 billion, edging past the consensus estimate of $64.41 billion. 

Intelligent Cloud revenues jumped 21% year over year to $26.7 billion. Sales of Office 365 Commercial and Dynamic 365 climbed 15% and 23%, respectively. Sales of the flagship Azure computing platform grew 20% year over year, down from 29% in the previous quarter.

Microsoft is one of the biggest beneficiaries of the AI boom. It has been investing billions of dollars in expanding its global network of data centers and other physical infrastructure required to develop AI technology that can compose documents, make images and serve as a lifelike personal assistant at work or home. Though Azure growth will continue to slow, Microsoft expects its AI business to be on track to bring in more than $10 billion in sales over the course of a year by sometime in the next quarter, said Nadella on the call.

Microsoft expects revenues of $68.1-$69.1 billion for the fiscal second quarter of 2025, implying 10.6% growth at the middle of the range. The Zacks Consensus Estimate is pegged at $69.65 billion.

ETFs in Focus 

T-Rex 2X Long Microsoft Daily Target ETF (MSFX) 

T-Rex 2X Long Microsoft Daily Target ETF seeks to magnify (200%) the daily performance of the stock of Microsoft. It charges 1.05% in annual fees and has accumulated $7.4 million in its asset base (read: Big 5 Earnings Ahead: Are Single-Stock ETFs Set for Big Gains?). 

iShares Global Tech ETF (IXN) 

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 117 stocks in its basket, Microsoft occupies the second spot with a 17.1% share. iShares Global Tech ETF has amassed $5.3 billion in its asset base and trades in a good volume of 175,000 shares a day, on average. The expense ratio is 0.41%. 

iShares U.S. Technology ETF (IYW)

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 140 securities in its basket. Of these, Microsoft occupies the third position in the basket, with 14.5% of the assets. iShares Dow Jones US Technology ETF has AUM of $19.1 billion and charges 39 bps in fees and expenses. Volume is good as it exchanges nearly 681,000 shares a day. IYW has a Zacks ETF Rank #1 with a Medium risk outlook. 

Vanguard Information Technology ETF (VGT)

Vanguard Information Technology ETF manages about $79.6 billion in its asset base and provides exposure to 316 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, MSFT occupies the  second position with a 14% share. Vanguard Information Technology ETF has an expense ratio of 0.10%, while volume is solid at nearly 387,000 shares. It has a Zacks ETF Rank #1 with a Medium risk outlook (read: Technology ETF (VGT) Hits New 52-Week High).

MSCI Information Technology Index ETF (FTEC)

MSCI Information Technology Index ETF is home to 299 technology stocks with AUM of $12.4 billion. It follows the MSCI USA IMI Information Technology Index. Microsoft is the third firm with a 14% allocation. MSCI Information Technology Index ETF has a 0.08% expense ratio, while volume is solid at 194,000 shares a day. It carries a Zacks ETF Rank #1 with a Medium risk outlook.

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