Microsoft Stock Could Give Traders an Alternate Play on AI

To stay competitive with their peers, big tech companies will need to continue leveraging the capabilities of artificial intelligence (AI). Given this competitive landscape, an alternate play on AI could be single-stock exchange-traded funds (ETFs) in companies like Microsoft.

The software maker’s recent earnings report “outdid analysts’ estimates” and revealed “a light quarterly revenue outlook,” per CNBC. Overall, earnings per share came in at $2.93 versus $2.78 per share expected. Revenue was $62.02 billion as opposed to $61.12 billion expected.

As mentioned, Microsoft’s ability to integrate AI into its product offerings will play a vital role moving forward. The company made key acquisitions and developments to shore up its AI capabilities.

“Technology stalwart Microsoft wedged its way into the thick of the AI race with its strategic tie-up with OpenAI, the developer that created ChatGPT,” reported Yahoo Finance. “The partnership gives Microsoft financial perks and cloud exclusivity, which should help it grow Microsoft Azure, its cloud platform, if OpenAI continues expanding.”

“More importantly, Microsoft is expanding its use of AI through the company, improving various existing products and services, such as its Microsoft 365 suite and enterprise software tools,” the report added.

AI Could Propel Microsoft Further

AI exposure can only propel Microsoft’s stock further. In addition, its strong fundamentals should give long-term and short-term investors plenty of reasons to stay bullish on the software giants.

“The stock is already one of history’s most outstanding performers, and the business has rock-solid financials, including annual free cash flow totaling $63 billion,” the Yahoo report said further, noting that with its cash flows and $3 trillion market cap, “Microsoft has deep pockets that few companies can come close to matching.”

Of course, a concern will be whether the anticipation of rate cuts in 2024 propelled the stock to lofty valuations. But given its strong position in AI growth and solid financials, any price dips will give investors an entry point or to add to a current position. Furthermore, short-term traders who want to maximize bullish price upticks in the stock can use the Direxion Daily MSFT Bull 1.5X Shares (MSFU), which adds an additional 50% exposure.

For traders looking to add a broader play on the growth prospects of AI, another option is the Direxion Daily Robotics, Artificial Intelligence & Automation Index Bull 2X ETF (UBOT). The fund seeks daily investment results that equal to 200% of the daily performance of the Indxx Global Robotics and Artificial Intelligence Thematic Index.

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