Investors Buy Large Volume of Call Options on Microsoft (NASDAQ:MSFT)

Microsoft Corporation (NASDAQ:MSFT) was the recipient of some unusual options trading on Friday. Stock traders bought 1,410,050 call options on the company. This represents an increase of approximately 70% compared to the typical daily volume of 827,515 call options.

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

Analysts Set New Price Targets

A number of research analysts recently weighed in on MSFT shares. TD Cowen raised Microsoft from a “buy” rating to a “hold” rating in a report on Tuesday, May 5th. Royal Bank Of Canada reissued a “buy” rating on shares of Microsoft in a report on Friday, May 22nd. Barclays reissued a “buy” rating on shares of Microsoft in a report on Thursday, May 7th. Weiss Ratings lowered Microsoft from a “buy (b-)” rating to a “hold (c+)” rating in a report on Tuesday, March 24th. Finally, DZ Bank reissued a “buy” rating on shares of Microsoft in a report on Thursday, April 30th. Thirty-nine research analysts have rated the stock with a Buy rating and seven have given a Hold rating to the company. Based on data from MarketBeat.com, Microsoft presently has an average rating of “Moderate Buy” and a consensus price target of $560.88.

Insider Transactions at Microsoft

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

Institutional Investors Weigh In On Microsoft

Large investors have recently added to or reduced their stakes in the company. Longfellow Investment Management Co. LLC grew its stake in shares of Microsoft by 51.3% during 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 last quarter. Bernzott Capital Advisors bought a new position in shares of Microsoft during the fourth quarter valued at about $34,000. Timmons Wealth Management LLC bought a new position in shares of Microsoft during the fourth quarter valued at about $36,000. Bayforest Capital Ltd bought a new position in shares of Microsoft during the third quarter valued at about $38,000. Finally, Fairway Wealth LLC grew its stake in shares of Microsoft by 287.0% during 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 last quarter. Hedge funds and other institutional investors own 71.13% of the company’s stock.

Microsoft Trading Up 5.4%

NASDAQ:MSFT opened at $450.24 on Friday. The company has a market cap of $3.34 trillion, a P/E ratio of 26.80, a P/E/G ratio of 1.54 and a beta of 1.10. The stock’s fifty day moving average price is $402.09 and its two-hundred day moving average price is $434.62. Microsoft has a 1 year low of $356.28 and a 1 year high of $555.45. The company has a debt-to-equity ratio of 0.08, a current ratio of 1.28 and a quick ratio of 1.27.

Microsoft (NASDAQ:MSFT) last posted its earnings results on Wednesday, April 29th. The software giant reported $4.27 earnings per share (EPS) for the quarter, topping the consensus estimate of $4.06 by $0.21. Microsoft had a return on equity of 31.94% and a net margin of 39.34%.The firm had revenue of $82.89 billion for the quarter, compared to the consensus estimate of $81.44 billion. During the same quarter in the prior year, the business posted $3.46 earnings per share. The business’s quarterly revenue was up 18.3% on a year-over-year basis. As a group, analysts expect that Microsoft will post 16.76 EPS for the current year.

Microsoft Announces Dividend

The firm also recently disclosed a quarterly dividend, which will be paid on Thursday, June 11th. Investors of record on Thursday, May 21st will be given a $0.91 dividend. 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 dividend payout ratio (DPR) is 21.67%.

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).