Microsoft Sees Unusually High Options Volume (NASDAQ:MSFT)

Key Points

• Microsoft saw unusually heavy options activity on Friday, with 1,410,050 call options traded. That was about 70% above its average call volume of 827,515, suggesting elevated investor interest.
• Recent earnings were strong, as Microsoft reported EPS of $4.27 versus expectations of $4.06 and revenue of $82.89 billion, up 18.3% year over year. The results helped support its premium valuation.
• The company also announced a quarterly dividend of $0.91 per share, payable June 11, with an annualized yield of about 0.8%. Meanwhile, analysts remain broadly positive, with a consensus rating of “Moderate Buy.”

Microsoft Corporation (NASDAQ:MSFT - Get Free Report) saw unusually large options trading activity on Friday. Investors bought 1,410,050 call options on the stock. This is an increase of 70% compared to the average volume of 827,515 call options.

Insider Activity at Microsoft

In other news, EVP Amy Coleman sold 1,262 shares of the firm's stock in a transaction that occurred on Thursday, May 14th. The shares were sold at an average price of $411.34, for a total transaction of $519,111.08. Following the transaction, the executive vice president directly owned 46,003 shares of the company's stock, valued at approximately $18,922,874.02. This trade represents a 2.67% decrease in their ownership of the stock. The sale was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this hyperlink. Also, EVP Kathleen T. Hogan sold 12,321 shares of the firm's stock in a transaction that occurred on Friday, March 6th. The stock was sold at an average price of $409.52, for a total transaction of $5,045,695.92. Following the transaction, the executive vice president directly owned 137,933 shares in the company, valued at $56,486,322.16. This represents a 8.20% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. 0.03% of the stock is currently owned by company insiders.

Hedge Funds Weigh In On Microsoft

Hedge funds and other institutional investors have recently bought and sold shares of the company. Longfellow Investment Management Co. LLC lifted its holdings in Microsoft by 51.3% in the second quarter. Longfellow Investment Management Co. LLC now owns 59 shares of the software giant's stock valued at $29,000 after buying an additional 20 shares during the period. Bernzott Capital Advisors acquired a new position in Microsoft in the fourth quarter valued at $34,000. Timmons Wealth Management LLC acquired a new position in Microsoft in the fourth quarter valued at $36,000. Bayforest Capital Ltd acquired a new position in Microsoft in the third quarter valued at $38,000. Finally, Fairway Wealth LLC lifted its holdings in Microsoft by 287.0% in the fourth quarter. Fairway Wealth LLC now owns 89 shares of the software giant's stock valued at $43,000 after buying an additional 66 shares during the period. Institutional investors and hedge funds own 71.13% of the company's stock.

Microsoft Price Performance

Shares of NASDAQ:MSFT opened at $450.24 on Friday. The firm has a market cap of $3.34 trillion, a PE ratio of 26.80, a price-to-earnings-growth ratio of 1.54 and a beta of 1.10. The firm's fifty day moving average is $402.09 and its 200-day moving average is $434.62. The company has a debt-to-equity ratio of 0.08, a quick ratio of 1.27 and a current ratio of 1.28. Microsoft has a 52 week low of $356.28 and a 52 week high of $555.45.

Microsoft (NASDAQ:MSFT - Get Free Report) last issued its quarterly earnings results on Wednesday, April 29th. The software giant reported $4.27 EPS for the quarter, topping analysts' consensus estimates of $4.06 by $0.21. The company had revenue of $82.89 billion for the quarter, compared to analyst estimates of $81.44 billion. Microsoft had a net margin of 39.34% and a return on equity of 31.94%. Microsoft's revenue was up 18.3% compared to the same quarter last year. During the same quarter in the previous year, the business earned $3.46 earnings per share. Sell-side analysts predict that Microsoft will post 16.76 earnings per share for the current year.

Microsoft Announces Dividend

The firm also recently declared a quarterly dividend, which will be paid on Thursday, June 11th. Stockholders of record on Thursday, May 21st will be issued a dividend of $0.91 per share. This represents a $3.64 dividend on an annualized basis and a dividend yield of 0.8%. The ex-dividend date is Thursday, May 21st. Microsoft's payout ratio is 21.67%.

Analyst Ratings Changes

MSFT has been the topic of a number of recent analyst reports. TD Cowen raised shares of Microsoft from a "buy" rating to a "hold" rating in a research note on Tuesday, May 5th. HSBC decreased their price objective on shares of Microsoft from $593.00 to $571.00 in a research note on Thursday, April 30th. Melius Research set a $430.00 price objective on shares of Microsoft in a research note on Monday, February 9th. UBS Group reissued a "buy" rating on shares of Microsoft in a research note on Friday, April 24th. Finally, Phillip Securities raised shares of Microsoft to a "buy" rating and set a $485.00 price objective on the stock in a research note on Wednesday, May 13th. Thirty-nine investment analysts have rated the stock with a Buy rating and seven have issued a Hold rating to the company's stock. Based on data from MarketBeat, the stock presently has a consensus rating of "Moderate Buy" and a consensus target price of $560.88.

Key Stories Impacting Microsoft

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Microsoft and Nvidia teased “a new era of PC,” with reports pointing to new Surface hardware and a possible AI-focused chip announcement at Computex, which could refresh the Windows/PC upgrade cycle. Article Title
• Positive Sentiment: Reports that Microsoft will unveil a new coding model and other in-house AI tools at next week’s Build conference reinforce the company’s AI monetization story and support sentiment around GitHub Copilot and Azure demand. Article Title
• Positive Sentiment: Microsoft’s latest earnings backdrop remains solid, with revenue growth of 18.3% and better-than-expected EPS, helping investors justify the stock’s premium valuation.
• Positive Sentiment: Several bullish writeups and analyst commentary say MSFT still has room to run because Azure, M365 cloud, and AI revenue are expanding faster than the broader software market. Article Title
• Neutral Sentiment: Microsoft is also drawing attention from investors, fund managers, and even congressional buyers, which supports the stock’s defensive-growth reputation but does not change fundamentals on its own.
• Negative Sentiment: A TechCrunch report says Microsoft is facing backlash for threatening a security researcher over unpatched bugs and code disclosure, adding some reputational noise ahead of Build. Article Title

About Microsoft

Microsoft Corporation is a global technology company headquartered in Redmond, Washington. Founded in 1975 by Bill Gates and Paul Allen, Microsoft develops, licenses and supports a broad range of software products, services and devices for consumers, enterprises and governments worldwide. Its operations span personal computing, productivity software, cloud infrastructure, enterprise applications, developer tools and gaming.

Microsoft's product portfolio includes the Windows operating system and the Microsoft 365 suite of productivity and collaboration tools (Office apps, Outlook, Teams).

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