Microsoft's Q2 Earnings Beat Fails to Impress: ETFs to Watch

Microsoft MSFT reported its second-quarter fiscal 2025 results, wherein it beat earnings and revenue estimates. However, the world’s largest software maker forecast slower growth in its cloud business and offered a downbeat revenue outlook for the ongoing quarter. This pushed down MSFT shares as much as 5% in after-market hours (see: all the Technology ETFs here). See the Zacks Earnings Calendar to stay ahead of market-making news.ETFs with double-digit exposure to this software leader are in focus. These include T-Rex 2X Long Microsoft Daily Target ETF MSFX, iShares Dow Jones US Technology ETF IYW, iShares Top 20 U.S. Stocks ETF TOPT, Principal Focused Blue Chip ETF BCHP and MSCI Information Technology Index ETF FTEC.Earnings in FocusEarnings per share came in at $3.23, beating the Zacks Consensus Estimate of $3.11 and improving from the year-ago earnings of $2.93. Revenues grew 12% year over year to $69.6 billion, edging past the consensus estimate of $68.70 billion. Intelligent Cloud revenues jumped 19% year over year to $25.54 billion. Sales of Office 365 Commercial and Dynamic 365 climbed 16% and 19%, respectively. Sales of the flagship Azure computing platform grew 31% year over year, down from 33% in the previous quarter.Microsoft is one of the biggest beneficiaries of the AI boom. CEO Satya Nadella said that the company now has a $13 billion annualized revenue run rate for artificial intelligence. Management expects the cloud-computing business to continue to grow slowly in the current quarter as the company struggles to build enough data centers to handle demand for its artificial intelligence products. For the fiscal third quarter, the company expects Azure to grow 31-32% year over year at constant currency, slower than 35% growth in the year-ago quarter (read: DeepSeek Shakes US Tech Dominance: Impact on Stocks & ETFs). The software maker 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. Microsoft plans to spend $80 billion in fiscal 2025 on constructing data centers designed for artificial intelligence workloads. Over half of this spending will be focused on the United States, according to a blog post by Brad Smith, Microsoft vice chair and president. Microsoft expects revenues of $67.7-$68.7 billion for the fiscal third quarter of 2025, shy of the Zacks Consensus Estimate of $69.74 billion.ETFs in FocusT-Rex 2X Long Microsoft Daily Target ETF (MSFX) T-Rex 2X Long Microsoft Daily Target ETF seeks to magnify (200%) the daily performance of Microsoft stock. It charges 1.05% in annual fees and has accumulated $8.3 million in its asset base. 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 second position in the basket, with 15.1% of the assets. iShares Dow Jones US Technology ETF has AUM of $20.8 billion and charges 39 bps in fees and expenses. Volume is good as it exchanges nearly 613,000 shares a day. IYW has a Zacks ETF Rank #1 with a Medium risk outlook. iShares Top 20 U.S. Stocks ETF (TOPT)iShares Top 20 U.S. Stocks ETF offers exposure to the potential growth of mega-cap stocks, which may benefit from their scale and resources. It tracks the S&P 500 Top 20 Select Index and holds 21 stocks in its basket, with MSFT taking the second spot at 13.6%. iShares Top 20 U.S. Stocks ETF has amassed $145.3 million in its asset base within three months of its inception and charges 20 bps in annual fees. It trades in an average daily volume of 246,000 shares (read: Go Beyond MAGS ETF: Tap Broadening of the Rally With TOPT ETF).Principal Focused Blue Chip ETF (BCHP)Principal Focused Blue Chip ETF is an actively managed fund offering exposure to blue-chip companies, which are well established in their industries and have the potential for capital growth and an expectation for above-average earnings. It holds 24 stocks, with Microsoft occupying the third position at 12.6%. Principal Focused Blue Chip ETF has AUM of $95.7 million and trades in a good volume of 9,000 shares a day, on average. It has an expense ratio of 0.58% and a Zacks ETF Rank #3. MSCI Information Technology Index ETF (FTEC)MSCI Information Technology Index ETF is home to 296 technology stocks with AUM of $13.8 billion. It follows the MSCI USA IMI Information Technology Index. Microsoft is the third firm with a 13% allocation. MSCI Information Technology Index ETF has 0.08% in expense ratio, while volume is solid at 279,000 shares a day. It carries a Zacks ETF Rank #1 with a Medium risk outlook.Want key ETF info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT): Free Stock Analysis Report Fidelity MSCI Information Technology Index ETF (FTEC): ETF Research Reports iShares U.S. Technology ETF (IYW): ETF Research Reports iShares Top 20 U.S. Stocks ETF (TOPT): ETF Research ReportsTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks