Traders Turn to 2x MSFT ETF as Microsoft Shares Drop

Microsoft shares have fallen 17.44% year-to-date. Some traders are using the Direxion Daily MSFT Bull 2X Shares (MSFU) to seek 200% of Microsoft’s daily moves and obtain amplified, short-term exposure.

MSFU is structured for short-term trading. Leveraged ETFs reset each trading day and aim to match a multiple of an underlying asset’s daily return. Over longer holding periods, compounding and daily resets can cause performance to diverge from two times the stock’s cumulative return.

Analysts point to Azure and Microsoft’s AI partnerships as reasons some traders are watching the stock. Morningstar analyst Dan Romanoff noted, “Microsoft is one of three public cloud providers that can deliver a wide variety of PaaS/IaaS solutions at scale. Based on its investment in OpenAI, the company has also emerged as a leader in AI.”

Romanoff estimated Azure at about $75 billion in revenue and growing roughly 30% annually. He added, “We believe that Azure is the centerpiece of the new Microsoft. Even though we estimate it is already an approximately $75 billion business, it is still growing at approximately 30% annually.”

Analysts say Microsoft has been converting on-premises products into cloud-based software-as-a-service offerings. Key applications cited include LinkedIn, Office 365, Dynamics 365 and the Power Platform, and that transition is past the halfway point, according to Romanoff. He noted Office 365 remains the market leader in productivity software and that the company has been successful at upselling customers to higher-priced packages with advanced telephony features.

Market participants are monitoring Microsoft’s quarterly results and metrics for Azure growth, enterprise cloud spending and adoption of AI-related services. Investors are also watching the company’s investments tied to OpenAI for signs of stronger monetization.

Traders seeking amplified exposure through MSFU are focusing on those metrics when assessing short-term trading opportunities.