Add a Dose of Leverage to Microsoft Stock if It Outperforms | ETF Trends

Investment firm Wedbush Securities is effusive in its praise for Microsoft, reiterating an “outperform” rating for the software company. This should give bullish traders some fodder to raise the stakes on their bets on Microsoft moving forward as big tech continues to rebound from last year.

One of the prime reasons for the bullishness surrounds its cloud service, Azure. Per an report, “checks have been positive around overall cloud deal flow and momentum for Redmond in the March quarter, despite Street fears with Wedbush’s analysis that Nadella & Co. should be able to at least hit the low 30% Azure growth for the quarter,” prompting Wedbush to raise its price target for Microsoft to $315 per share from $290.

The stock has been a stellar performer this year, rising 18% despite continued inflation fears and rising rates. As more investors bet on a rate hike pause, this could further feed into bullishness for Microsoft and big tech all around after a dismal 2022.

“Clearly Microsoft’s stock has been on a tear so far in 2023 as we believe investors are starting to slowly appreciate that still less than 50% of the workloads have moved to the cloud and Redmond remains in an enviable position to gain share in its enterprise backyard against AWS in this cloud arms race over the next 12 to 18 months,” Wedbush analysts said.

“We believe 90%+ of Azure/Office 365 large deal activity is still on track through our MSFT partner checks for the June quarter with modest push-outs and downsizing of major cloud projects seen in the field containable thus far,” the analysts added. “We acknowledge that some larger cloud deals from the financial vertical could clearly get downsized as data center projects get curtailed in this more scrutinized IT budget backdrop. However, federal deals are seeing the opposite impact as MSFT as well as cloud brethren Amazon, Google, Oracle, and IBM are seeing a surge of Beltway cloud deal activity in 2023 with a major shift to cloud underway from the Pentagon to civil agencies in the 202 area code.”

2 Options for Microsoft

Traders looking to extract more profits from their bullish notions on Microsoft’s stock can look at the Direxion Daily MSFT Bull 1.5X Shares (MSFU). The fund adds a half dose of leverage to a trader’s bet in order to maximize profitability.

On the other hand, to play short-term moves to the downside, traders can also use the Direxion Daily MSFT Bear 1X Shares (MSFD). Both ETFs are part of Direxion Investments’ suite of single-stock ETFs that allow traders to play both sides of a trend.

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