Microsoft and the cloud computing sector appear to have sloughed off April volatility showers . The software maker has been rallying post-Q1 earnings. That could be an indicator of ongoing strength in cloud computing as well as AI.
Microsoft’s cloud computing services, Azure, got much of the praise for its strong revenues. Revenues topped 33%, beating out The Street and CNBC analyst forecasts of 30.3%.
“Clearly, the macro environment remains a wild card, but with Azure back in ‘beat/raise’ mode, we believe that overhang now turns into a tailwind and highlights not only the significant demand for AI services on Azure, but also MSFT’s broad base of infrastructure offerings to support the ongoing migration of enterprise workloads to the cloud,” said Evercore ISI’s Kirk Materne.
Of course, strong earnings make for a happy CEO. With Microsoft’s Magnificent Seven peers also looking to bolster their own cloud and AI capabilities, this is a palpable win for the software maker.
“It was a record quarter driven by continued strength of Microsoft Cloud,” said Satya Nadella, Microsoft’s CEO. “Cloud and AI are the essential inputs for every business to expand output, reduce costs, and accelerate growth.”
Traders who think Microsoft can maintain their post-Q1 earnings momentum may want to look at the Direxion Daily MSFT Bull 2X Shares (MSFU ). Likewise, traders sensing the euphoria may subside can also look to play a pullback with the Direxion Daily MSFT Bear 1X Shares (MSFD ). Having both funds available allow traders to maintain flexibility, especially in a volatile market such as now.
Trade the Sectors
Strength in Microsoft could portend to strength ahead for cloud computing and AI. If traders don’t want the concentration risk that comes with individual stocks, they can choose to trade the broad sectors of cloud computing and AI.
Specifically, traders can use the Direxion Daily Cloud Computing Bull 2X Shares ETF (CLDL ), which capitalizes off cloud-computing growth. Exposure to AI is available via the Direxion Daily Robotics, Artificial Intelligence & Automation Index Bull 2X ETF (UBOT ).
The most recent tariff volatility isn’t stopping the growth of cloud computing and AI. The top movers and shakers in both technologies should continue to exhibit growth as the world becomes more reliant on technology.
“In the most recent quarter, the three leading cloud providers demonstrated robust growth in their cloud businesses, with artificial intelligence (AI) emerging as a key driver across all platforms,” ITPro Today mentioned.
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