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Microsoft names Carolina Dybeck Happe as EVP and COO, as it competes with Amazon in the cloud market and makes strategic hires in AI division.

Microsoft Hires Former GE CFO Carolina Dybeck Happe As COO To Boost Cloud And AI Focus

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The EU accuses Microsoft of anti-competitive behavior by bundling Teams with Office, giving it an unfair advantage over competitors like Slack and Zoom.

EU Charges Microsoft with Anti-Competitive Practices Over Teams Bundling

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Apple Inc. (NASDAQ: AAPL) has regained its position as the world&#39;s most valuable company, topping Microsoft Corp. (NASDAQ: MSFT).

ETFs in Focus as Apple Reclaims Most Valuable Title

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Microsoft Corp (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>) has appointed Carolina Dybeck Happe <a target="_blank" href="https://blogs.microsoft.com/blog/2024/09/12/microsoft-names-new-executive-vice-president-and-chief-operations-officer/" rel="noreferrer noopener">as its new</a> EVP and COO.
Happe served at GE as SVP and CFO from 2020 until September 2023. Reuters reports that she was pivotal in leading the company&#8217;s turnaround and helped complete the spin-off of energy infrastructure unit GE Vernova in April 2024 after she stepped down from her role as CFO.
Microsoft&#8217;s move coincides with its pursuit of the lead in the cloud services market by solidifying its moat against Amazon.Com Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>) Amazon Web Services.
Also Read: <a target="_blank" href="https://www.benzinga.com/news/24/09/40707618/whats-going-on-with-amd-stock-on-wednesday" rel="noreferrer noopener">AMD Taps Former Nvidia Exec to Lead AI Vision, Bolstering Strategic Growth</a>
The hiring also followed the CrowdStrike Holdings, Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/CRWD#NASDAQ">CRWD</a>) <a target="_blank" href="https://www.benzinga.com/news/24/09/40791329/microsoft-plans-major-cybersecurity-summit-after-global-it-outage-hits-8-5m-devices-earlier-this-yea" rel="noreferrer noopener">outage that hampered</a> Microsoft devices, Reuters cites D.A. Davidson analyst Gil Luria.
Microsoft made <a target="_blank" href="https://www.benzinga.com/news/24/05/38664730/googles-deepmind-co-founder-mustafa-suleyman-shares-his-exciting-first-month-at-microsoft-truly-tran" rel="noreferrer noopener">another critical hiring</a> earlier this year. In March 2024, the company poached the co-founder of&nbsp;Alphabet Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOG#NASDAQ">GOOG</a>) (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOGL#NASDAQ">GOOGL</a>) Google&nbsp;DeepMind&nbsp;AI lab co-founder Mustafa Suleyman from Inflection AI to lead Microsoft&#8217;s AI division.
Microsoft gained over 27% in the last 12 months. Investors can gain exposure to the stock through iShares Global Tech ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IXN#NYSE">IXN</a>) and Vanguard Information Tech ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VGT#NYSE">VGT</a>).
<h2 class="wp-block-heading">Microsoft Stock Prediction For 2024</h2>
Equity research analysts on and off Wall Street typically use earnings growth and fundamental research as a form of valuation and forecasting. But many in trading turn to technical analysis as a way to form predictive models for share price trajectory.
Some investors look to trends to help forecast where they believe a stock could trade at a certain point in the future. Looking at Microsoft, an investor could make an assessment about a stock's long term prospects using a moving average and trend line. If they believe a stock will remain above the moving average, which many believe is a bullish signal, they can extrapolate that trend into the future using a trend line. 
For Microsoft, the 200-day moving average sits at $412.21, according to <a href="https://pro.benzinga.com/">Benzinga Pro</a>, which is below the current price of $427.0. For more on charts and trend lines, <a href="https://pro.benzinga.com/">see a description here.</a>
Traders believe that when a stock is above its moving average, it is a generally bullish signal, and when it crosses below, it is a more negative signal. Investors could use trend lines to make an educated guess about where a stock could trade at a later date if conditions remain stable.
Price Action: MSFT stock traded lower by 0.19% at $426.21 premarket at the last check on Friday.
Also Read:
<ul>
<li><a href="https://www.benzinga.com/news/24/09/40687996/microsofts-ai-pcs-stumble-with-game-compatibility-report" target="_blank" rel="noreferrer noopener">Microsoft&#8217;s AI PCs Stumble With Game Compatibility: Report</a></li>
</ul>

On Tuesday, Brussels accused Microsoft Corp (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>) of engaging in <a target="_blank" href="https://www.benzinga.com/markets/equities/24/05/38787304/microsoft-faces-heightened-eu-scrutiny-over-teams-software-report" rel="noreferrer noopener">anti-competitive behavior</a> by bundling its Teams app with its Office suite.
The EU&#8217;s charge sheet alleges that this bundling gives Teams an undue advantage, harming competitors such as Atlassian Corp&#8217;s (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TEAM#NASDAQ">TEAM</a>) Slack and Zoom (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/ZM#NASDAQ">ZM</a>), Reuters reports.
On Tuesday, the European Union issued a formal charge sheet to Microsoft, outlining concerns that integrating Teams with Office unfairly disadvantages other video conferencing apps.
Also Read: <a target="_blank" href="https://www.benzinga.com/markets/equities/24/06/39428719/whats-going-on-with-nvidia-stock-friday" rel="noreferrer noopener">Nvidia CEO Predicts $1 Trillion Overhaul for AI Data Centers</a>
Margrethe Vestager, the EU&#8217;s executive vice president for competition policy, stated that if Microsoft&#8217;s conduct is confirmed, it would be illegal under EU competition rules.
In April, Microsoft attempted to <a target="_blank" href="https://www.benzinga.com/government/24/04/38017994/microsoft-decouples-teams-from-office-globally-in-response-to-antitrust-concerns-report" rel="noreferrer noopener">address regulatory concerns</a> by proposing to unbundle Teams from Office products beyond Europe.
Microsoft aims to settle the case to avoid formal charges and a potential fine of up to 10% of its annual global revenues.
Meanwhile, the company is also <a target="_blank" href="https://www.benzinga.com/government/24/04/38299939/eu-clears-microsofts-13b-openai-investment-from-formal-probe-a-relief-for-tech-giants" rel="noreferrer noopener">facing heightened scrutiny</a> over its $13 billion partnership with OpenAI, with Brussels considering a full probe.
The European Commission is focusing on Microsoft and investigating other major tech companies.
Over the last decade, Microsoft doled out $1.71 billion (1.6 billion euros) in EU antitrust fines.
Microsoft stock gained over 36% in the last 12 months. Investors can gain exposure to the stock via SPDR Select Sector Fund &#8211; Technology (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLK#NYSE">XLK</a>) and iShares Global Tech ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IXN#NYSE">IXN</a>).
Price Action: MSFT shares are trading higher by 0.08% at $447.63 at&nbsp;the last check on Tuesday.
Also Read: <a target="_blank" href="https://www.benzinga.com/news/24/06/39318448/microsoft-is-betting-big-on-ai-outpacing-rivals-with-new-strategy" rel="noreferrer noopener">Microsoft Is Betting Big on AI, Outpacing Rivals with New Strategy</a>
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo via Shutterstock

Apple Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/aapl#NASDAQ">AAPL</a>) has regained its position as the world&#39;s most valuable company, topping Microsoft Corp. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/msft#NASDAQ">MSFT</a>). This achievement marks a significant milestone, driven by Apple&#39;s recent announcement related to its generative AI initiative called &quot;Apple Intelligence&quot;.
These potential AI initiatives generated optimism about future iPhone generations and likely revenue increases. Apple Intelligence will be available for the iPhone 15 Pro, iPads, and Macs running Apple&#39;s M1 series chips and newer models starting this fall. This could even result in a rebound in iPhone sales following recent declines in fiscal performance.
<h3>Market Capitalization and Recent Performance</h3>
Thanks to investor optimism surrounding its growth prospects, particularly in AI, Apple just logged its best three-day run since 2020, per Bloomberg. Following a robust rally, Apple closed with a market capitalization of $3.285 trillion on Jun 13, 2024, narrowly surpassing Microsoft at $3.282 trillion.
This is the first time since January that Apple has exceeded Microsoft in market value, reflecting recent reshufflings among Wall Street&#39;s top stocks. In fact, earlier in the week, Apple briefly fell behind Nvidia Corp. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/nvda#NASDAQ">NVDA</a>) in market capitalization. However, investors have shown confidence in Apple&#39;s potential as a likely AI winner, fueling its recent gains.
<h3>Analyst Insights</h3>
Bank of America analyst Wamsi Mohan highlighted the potential of AI functionalities to drive a significant upgrade cycle for Apple, potentially raising average selling prices and boosting revenue in the coming years, as quoted on Bloomberg.
<h3>Price Target</h3>
Based on short-term price targets offered by 30 analysts, the average price target for Apple comes to $206.96. The forecasts range from a low of $164.00 to a high of $275.00. And the current price of Apple is $214.24.
<h3>What Lies Ahead?</h3>
So far, Apple&#39;s AI initiatives have been well-received by investors. However, stiff competition awaits Apple in the AI space. Stocks with more direct exposure to AI, such as Microsoft, Amazon.com Inc., Alphabet Inc., and Meta Platforms Inc., have shown stronger performance in 2024. Nvidia, in particular, has seen immense gains due to its prominent role in AI development.
Plus, Apple&#39;s association With ChatGPT has received a mixed response. Ben Wood, chief analyst at CCS Insight, and Tesla chief Elon Musk believe that ChatGPT integration may create deeper problems for the firm, as quoted on BBC.
Investors should note that Apple&#39;s competitors have faced several AI hiccups during the initial phase of the rollout. Apple might also experience similar hiccups. Hence, it is better to track the company with the ETF approach. The basket approach minimizes the company-specific concentration risks.
Apple-heavy ETFs include the likes of Technology Select Sector SPDR Fund (ARCA:XLK), iShares Global Tech ETF (ARCA:IXN) and iShares U.S. Technology ETF (ARCA:IYW). Incidentally, these ETFs have solid exposure to Microsoft&mdash;the second-most valuable company and an AI winner.
<a href="https://www.zacks.com/stock/news/2288265/etfs-in-focus-as-apple-reclaims-most-valuable-title?cid=CS-BENZ-FT-etf_news_and_commentary-2288265">To read this article on Zacks.com click here.</a>

Apple Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>) shares closed 1.91% lower on Monday in reaction to the highly anticipated Worldwide Developers Conference (WWDC) 2024, where the Cupertino tech giant unveiled new <a href="https://www.benzinga.com/news/24/06/39256948/tim-cook-announces-apple-intelligence-for-iphones-calls-it-next-big-step-tremendously-excited">advancements in artificial intelligence.</a>
What Happened: At WWDC 2024, Apple introduced &#8220;Apple Intelligence,&#8221; a systemwide software update that promises to offer a personalized generative AI experience for users. 
The new iOS 18, powering its flagship devices, allows for a more customizable iPhone home screen and includes enhanced versions of its in-house apps. Siri, the voice assistant, will now better understand natural language, process contextual information and perform actions within apps.
The AI features will be integrated with the latest device software, enabling users to summarize text and generate content such as personalized birthday animations. Privacy remains a core focus, with most AI processing happening on the device itself rather than in the cloud.
Apple also announced a partnership with Microsoft Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NYSE">MSFT</a>)&#8217;s OpenAI to bring ChatGPT to its devices and showcased the latest operating system for its Vision Pro mixed-reality headset and iPhone. Vision Pro will be available in eight additional countries, including Australia, Canada, China, France, Germany, Hong Kong, Japan, Singapore and the U.K. starting in June.
<h1 class="wp-block-heading">Why Are Apple Shares Falling After WWDC 2024?</h1>
The market had higher expectations from Apple, particularly in terms of monetizing the announced innovations. 
No new products were launched, except for the expansion of Vision Pro into new markets. Apple&#8217;s strategy to integrate Siri with ChatGPT highlights the existing gap compared to OpenAI in the realm of large language models (LLMs).
Historically, Apple&#8217;s stock performance during past WWDC events has been lackluster. Over the past 10 editions, Apple shares have more often closed down rather than up following these events.
<figure class="wp-block-table is-style-stripes"> 
<table>
<thead>
<tr>
<th>Apple WWDC</th>
<th>AAPL %chg on WWDC</th>
</tr>
</thead>
<tbody>
<tr>
<td>June 4, 2014</td>
<td>-0.7%</td>
</tr>
<tr>
<td>June 8, 2015</td>
<td>-0.7%</td>
</tr>
<tr>
<td>June 13, 2016</td>
<td>-1.5%</td>
</tr>
<tr>
<td>June 5, 2017</td>
<td>-1.0%</td>
</tr>
<tr>
<td>June 4, 2018</td>
<td>+0.8%</td>
</tr>
<tr>
<td>June 3, 2019</td>
<td>-1.0%</td>
</tr>
<tr>
<td>June 22, 2020</td>
<td>+2.6%</td>
</tr>
<tr>
<td>June 7, 2021</td>
<td>+0.0%</td>
</tr>
<tr>
<td>June 6, 2022</td>
<td>+0.5%</td>
</tr>
<tr>
<td>June 5, 2023</td>
<td>-0.8%</td>
</tr>
<tr>
<td>June 10, 2024</td>
<td>-1.9%</td>
</tr>
</tbody>
</table>
</figure>
<h1 class="wp-block-heading">Not A Broader Tech Selloff</h1>
Monday&#8217;s decline in Apple shares appears company-specific, as the broader tech sector showed gains.
Among the &#8220;Magnificent Seven,&#8221; only Apple and Tesla Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TSLA#NASDAQ">TSLA</a>) experienced declines, while the tech-heavy Nasdaq 100, as tracked by the Invesco QQQ Trust (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>), rose by 0.3%.
Key exchange-traded funds with significant exposure to Apple also showed gains:
<ul>
<li>Technology Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLK#NYSE">XLK</a>) up 0.1%</li>
<li>iShares Global Tech ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IXN#NYSE">IXN</a>) up 0.2%</li>
<li>Vanguard Information Technology ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VGT#NYSE">VGT</a>) up 0.3%</li>
</ul>
Read Now: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/06/39257592/economist-warns-crash-of-a-lifetime-is-coming-predicts-s-p-500-to-plummet-86-from-t">Economist Warns &#8216;Crash Of A Lifetime&#8217; Is Coming, Predicts S&amp;P 500 To Plummet &#8216;86% From The Top&#8217;</a>
Photo: Courtesy Apple

Equities

Large Cap

Sector ETFs

TSLA

Apple Shares Slide Nearly 2% On WWDC 24 Day: Magnificent 7, Tech Stocks Hold Gains

Apple Inc&#8217;s&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>) iPhone sales in China increased by 52% year-on-year in April, Reuters cites from industry reports. The stock price gained after the report.
The iPhone maker&#8217;s results follow a softer performance earlier this year in the leading smartphone market. Apple battled rivalry in the premium market from local rivals like&nbsp;Huawei Technologies Co.
According to the China Academy of Information and Communications Technology (CAICT),&nbsp;smartphone sales in China increased by 25.5% to 22.7 million units in April,&nbsp;Reuters notes.
Apple&#8217;s shipments in China increased by 12% in March, marking a significant improvement from the first two months of 2024, when the company noted a 37% decline in sales.&nbsp;
The growth reflected price discounts from Apple and its Chinese retailers to boost sales.
Previously, analysts expected&nbsp;<a target="_blank" href="https://www.benzinga.com/government/24/03/37941515/apples-iphone-sales-faces-sharp-decline-in-china-amid-rising-competition" rel="noreferrer noopener">iPhone sales to</a>&nbsp;continue their downward trajectory, with projections that they would lead the market&#8217;s decline by over 20%.
Meanwhile, Apple made every effort to&nbsp;<a target="_blank" href="https://www.benzinga.com/government/24/05/38708040/apple-reverses-sales-decline-in-china-with-impressive-march-shipment-growth" rel="noreferrer noopener">boost ties with&nbsp;</a>China, including launching a new Apple store in Shanghai, and company chief Tim Cook attended the China Development Forum in Beijing.
Apple stock gained over 7% in the last 12 months.&nbsp;Investors can gain exposure to the stock via&nbsp;IShares Global&nbsp;Tech ETF&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IXN#NYSE">IXN</a>) and&nbsp;IShares U.S.&nbsp;Technology ETF&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IYW#NYSE">IYW</a>).
Price Action: AAPL shares traded higher by 1.67% to $193.15 premarket at the last check on Tuesday.
Image Source &#8211; Apple

Movers

What's Going On With Apple Stock On Tuesday?

The world&#39;s largest software maker &mdash; Microsoft (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/msft#NASDAQ">MSFT</a>) &mdash; reported strong third-quarter fiscal 2024 results, beating earnings and revenue estimates. driven by strong demand for cloud and artificial intelligence offerings. 
Buoyed by robust results, shares of MSFT jumped as much as 5% in after-market hours. Investors could tap the opportune moment in this software leader through ETFs having double-digit exposure to Microsoft. These are Select Sector SPDR Technology ETF (ARCA:XLK), MSCI Information Technology Index ETF (ARCA:FTEC), iShares Global Tech ETF (ARCA:IXN), Vanguard Information Technology ETF (ARCA:VGT) and iShares Dow Jones US Technology ETF (ARCA:IYW).
<h3>Earnings in Focus</h3>
Earnings per share came in at $2.94, beating the Zacks Consensus Estimate of $2.81 and were 20% higher than the year-ago earnings. Revenues grew 17% year over year to $61.9 billion, edging past the consensus estimate of $60.63 billion. 
Intelligent Cloud revenues jumped 21% year over year. Sales of Office 365 Commercial and Dynamic 365 climbed 15% and 23%, respectively. Sales of the flagship Azure computing platform grew 31% year over year. 
The software maker invested billions of dollars into AI in a bid to turbocharge its growth, particularly its cloud computing services, and is now reaping the fruits. About 7% of the increase in Azure revenues came from AI. Microsoft CEO Satya Nadella said on a call that 65% of Fortune 500 companies are using the Azure service that delivers OpenAI&#39;s technology to businesses. Demand for generative AI will continue to fuel Microsoft&#39;s cloud business. 
Microsoft is now emphasizing AI transformation through its new offerings like Microsoft Copilot. &quot;Microsoft Copilot and Copilot stack are orchestrating a new era of AI transformation, driving better business outcomes across every role and industry&quot; Nadella said. 
Microsoft expects revenues of $63.5-$64.5 billion for fiscal fourth-quarter 2024. The Zacks Consensus Estimate is pegged at $64.49 billion.
<h3>ETFs in Focus</h3>
Select Sector SPDR Technology ETF (ETF:XLK) 
Select Sector SPDR Technology ETF is the most popular and liquid ETF in the technology space, with AUM of $61.8 billion and an average daily volume of 7 million shares. It offers broad exposure to the technology sector and follows the Technology Select Sector Index. Select Sector SPDR Technology ETF holds about 65 securities in its basket, with Microsoft occupying the top position at 23.5%. 
Select Sector SPDR Technology ETF charges 9 bps in fees per year from investors and has a Zacks ETF Rank #1 with a Medium risk outlook. 
MSCI Information Technology Index ETF (FTEC) 
MSCI Information Technology Index ETF is home to 303 technology stocks with AUM of $9.1 billion. It follows the MSCI USA IMI Information Technology Index. Microsoft is the top firm with an 18.3% allocation. 
MSCI Information Technology Index ETF has 0.08% in expense ratio, while volume is solid at 253,000 shares a day. It carries a Zacks ETF Rank #1 with a Medium risk outlook. 
iShares Global Tech ETF (ETF:IXN) 
iShares Global Tech ETF provides exposure to electronics, computer software and hardware, and informational technology companies by tracking the S&amp;P Global 1200 Information Technology 4.5/22.5/45 Capped Index. Holding 117 stocks in its basket, Microsoft occupies the top spot with a 20.1% share. 
iShares Global Tech ETF has amassed $4.2 billion in its asset base and trades in a good volume of 223,000 shares a day, on average. The expense ratio is 0.41%. 
Vanguard Information Technology ETF (ETF:VGT) 
Vanguard Information Technology ETF manages about $61.3 billion in its asset base and provides exposure to 313 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, MSFT occupies the top position with an 18.3% share. 
Vanguard Information Technology ETF has an expense ratio of 0.10%, while volume is solid at nearly 434,000 shares. It has a Zacks ETF Rank #1 with a Medium risk outlook. 
iShares U.S. Technology ETF (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 131 securities in its basket. Of these, Microsoft occupies the top position in the basket, with 18.6% of the assets. 
iShares Dow Jones US Technology ETF has AUM of $15.8 billion and charges 40 bps in fees and expenses. Volume is good as it exchanges nearly 909,000 shares a day. IYW has a Zacks ETF Rank #1 with a Medium risk outlook.
<a href="https://www.zacks.com/stock/news/2263342/etfs-to-buy-as-cloud-ai-power-microsoft-s-q3-earnings?cid=CS-BENZ-FT-etf_news_and_commentary-2263342">To read this article on Zacks.com click here.</a>

Earnings

FTEC

ETFs to Buy as Cloud, AI Power Microsoft's Q3 Earnings

Citigroup&nbsp;analyst Tyler Radke maintained&nbsp;Microsoft Corp&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>) with a Buy and lowered the&nbsp;<a target="_blank" href="https://www.benzinga.com/quote/MSFT/analyst-ratings" rel="noreferrer noopener">price target from $480 to $475</a>.
The analyst remained positive on Microsoft ahead of third-quarter results as his quarterly inputs point to strengthening Azure growth trends boosted again by AI services, with solid CoPilot interest, though more bite-sized deals initially.&nbsp;
Radke&#8217;s strong inputs and a more positive PC backdrop against conservative guidance should yield room for upside across key KPIs (including Azure, which should reaccelerate), while he expects continued cost discipline to drive strong EPS upside.&nbsp;
BofA Securities&nbsp;analyst Brad Sills reiterated a Buy rating on Microsoft with a price target of $480.
Following a round of calls with nearly a dozen key Microsoﬅ partners, the analyst expects a healthy 1% upside to his third-quarter revenue estimate of $60.5 billion, stemming from sustained strength in Azure and M365.&nbsp;
The analyst expects FX to provide a 50bps tailwind to revenue growth, primarily in line with expectations heading into the quarter.&nbsp;
He expects a 1% upside to his estimate for Azure growth of 28.0% cc, given positive system integrator partner feedback suggesting stable, healthy migration of new workloads to the cloud platform, relative strength in the Microsoﬅ security stack, and ramping usage of Azure AI and Microsoﬅ security stack.
Sills expects a $220 million upside to his PBP segment revenue estimate to $19.5 billion from better Commercial Office growth, driven by better ASP (average selling prices) on sustained E3/E5 strength and early traction with M365 copilot. Channel feedback suggests some uptick in Copilot activity, primarily in the pipeline, but also early adoption.&nbsp;
The analyst expects $50 million of downside to his MPC revenue estimate of $14.9 billion, driven by weaker PCs in the calendar first quarter.&nbsp;
IDC reported preliminary first-quarter PC growth of +2% Y/Y versus its prior expectation for +4% Y/Y when Microsoﬅ provided guidance.
Sills noted that the next AI catalyst for Microsoﬅ shares will prove that critical AI-related product cycles are gaining traction via incremental growth metrics such as M365 Copilot users or via accelerating Commercial Office ASP (from 6% to 7%). Microsoﬅ&#8217;s shares are pricing in AI-driven revenue and FCF acceleration, per the analyst.&nbsp;
However, he noted the multiple holding with an AI cycle that is gaining momentum given the scale of the AI opportunity (IDC sizes the AI market to $944 billion by 2027). As per Sills, the stock should then compound at the FCF growth rate, accelerating toward the low 20s, with incremental contribution from AI in the coming quarters. The analyst noted Microsoﬅ as a top pick in soﬅware.
Microsoft stock gained over 40% in the last 12 months. Investors can gain exposure to the stock via&nbsp;IShares Global Tech ETF&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IXN#NYSE">IXN</a>) and&nbsp;Vanguard Information Tech ETF&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VGT#NYSE">VGT</a>).
Price Action: MSFT shares traded lower by 1.5% at $405.40 on the last check Thursday.
Also Read: <a href="https://www.benzinga.com/news/24/04/38294517/linkedin-unveils-premium-pages-new-subscription-plan-offers-exclusive-growth-tools-for-small-busines" target="_blank" rel="noreferrer noopener">LinkedIn Unveils Premium Pages, New Subscription Plan Offers Exclusive Growth Tools For Small Businesses</a>
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Analyst Ratings

Microsoft's Strategic Emphasis on AI and Cloud Services Signals Strong Future Performance: Analysts

Microsoft Corp&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>) has unveiled a new hub in London for its recently established&nbsp;<a target="_blank" href="https://www.benzinga.com/markets/cryptocurrency/23/11/36031993/microsoft-marks-its-largest-uk-investment-with-major-focus-on-ai-development" rel="noreferrer noopener">consumer AI division</a>, led by AI scientist and engineer Jordan Hoffmann, who the company recruited from the notable AI startup Inflection AI.&nbsp;
This move follows Microsoft&#8217;s investment in Inflection AI last year and CEO Satya Nadella&#8217;s introduction of a consumer AI division three weeks ago. Inflection AI&#8217;s founders, including Mustafa Suleyman of Deepmind fame, are leading the division, TechCrunch&nbsp;<a target="_blank" href="https://techcrunch.com/2024/04/08/microsoft-ai-gets-a-new-london-hub-headed-up-by-former-inflection-and-deepmind-scientist-jordan-hoffmann/" rel="noreferrer noopener">reports</a>.&nbsp;
Also Read:&nbsp;<a target="_blank" href="https://www.benzinga.com/news/23/11/36021642/microsoft-president-makes-startling-revelations-on-arrival-of-advanced-ai" rel="noreferrer noopener">Microsoft President Makes Startling Revelations on Arrival of Advanced AI</a>
Hoffmann, a former Deepmind research scientist who transitioned to Inflection AI in 2022, has been recognized by Suleyman as an &#8220;exceptional AI scientist and engineer.&#8221;
Hoffmann is set to head the London unit, with Suleyman reporting directly to Nadella from the U.S.
Microsoft plans to seek new AI talents to join Hoffmann at its Paddington office, focusing on developing new language models and related infrastructure.&nbsp;
This initiative is part of Microsoft&#8217;s broader £2.5 billion ($3.15 billion) investment in the U.K. over the next three years, promising to expand its data center footprint and train over a million people for the AI economy.&nbsp;
The investment will expand the data center footprint to include sites in London and Cardiff, potentially extending to northern England, and deliver over 20,000 of the most advanced GPUs to the U.K. by 2026.&nbsp;
Additionally, the company has committed to a multimillion-dollar initiative to train one million individuals in the skills needed to develop and operate AI.
The U.K. is a leading country in AI R&amp;D investment and hosts&nbsp;Google&#8217;s&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOG#NASDAQ">GOOG</a>) (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOGL#NASDAQ">GOOGL</a>) DeepMind, which signals a potential talent competition between major AI players.&nbsp;
Microsoft stock gained 47% in the last 12 months. Investors can gain exposure to the stock via&nbsp;IShares Global Tech ETF&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IXN#NYSE">IXN</a>) and&nbsp;Vanguard Information Tech ETF&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VGT#NYSE">VGT</a>).
Price Actions:&nbsp;Microsoft shares traded higher by 0.24% at $426.59 on the last check Monday.
Also Read:&nbsp;<a target="_blank" href="https://www.benzinga.com/government/24/04/38017994/microsoft-decouples-teams-from-office-globally-in-response-to-antitrust-concerns-report" rel="noreferrer noopener">Microsoft Decouples Teams from Office Globally in Response to Antitrust Concerns: Report</a>
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo via Shutterstock

Microsoft's £2.5B UK Investment Fuels AI Talent Hunt and Data Center Expansion

Apple Inc&#8217;s&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>) CEO, Tim Cook, inaugurated a new store in Shanghai, showcasing the tech giant&#8217;s ongoing commitment to China as a critical market and manufacturing hub.&nbsp;
The store opening, which took place amid an atmosphere of enthusiastic applause, marked Cook&#8217;s&nbsp;<a target="_blank" href="https://www.benzinga.com/government/24/03/37479073/apples-iphone-sales-dip-24-in-china-falls-to-fourth-place-behind-vivo-and-huawei" rel="noreferrer noopener">presence in Shanghai</a>&nbsp;as part of a highly publicized visit.&nbsp;
The opening of Apple&#8217;s eighth store in Shanghai was part of Cook&#8217;s efforts to fortify Apple&#8217;s relationship with China, where he engaged with local celebrities, tasted local cuisine, and met with critical suppliers like&nbsp;BYD Co&nbsp;and&nbsp;Lens Technology Co, Bloomberg&nbsp;<a target="_blank" href="https://www.bloomberg.com/news/articles/2024-03-21/apple-ceo-opens-new-shanghai-store-in-show-of-china-commitment?srnd=technology-vp&amp;sref=TBDibEcD" rel="noreferrer noopener">reports</a>.
Cook&#8217;s visit underscores his and Apple&#8217;s commitment to maintaining and strengthening ties with China.&nbsp;
This commitment is evident in his meetings with suppliers and his promotion of Apple products, despite the challenges posed by geopolitical tensions, the Chinese government&#8217;s restrictions on iPhone usage among state agencies, and the competitive threat from Huawei Technologies Co.
In the first six weeks of the year, iPhone sales in China plummeted by 24%, pushing Apple to the fourth spot among the country&#8217;s smartphone vendors, according to Counterpoint Research.&nbsp;
Vivo, hailing from Dongguan and known for targeting the budget-friendly market, surpassed Apple and became China&#8217;s leading smartphone seller. While both companies saw sales declines amidst a 7% contraction in&nbsp;
China&#8217;s overall smartphone market,&nbsp;Huawei Technologies Co.&nbsp;saw its market share jump to 16.5% thanks to its Mate 60 Pro series and a rise in nationalist buying trends.&nbsp;
Amid a general market slowdown affecting iPhone performance, Apple initiated rare discounts on its website in January, and online resellers cut prices by as much as $180.&nbsp;
Despite these efforts and steep discounts on the iPhone 15 series by resellers, Apple&#8217;s sales in China fell by 13% to $20.8 billion in the December quarter, marking a significant downturn.
The year 2023 saw Apple diversifying&nbsp;<a target="_blank" href="https://www.benzinga.com/government/23/02/31085106/apples-chinese-suppliers-sped-to-migrate-production-beyond-country-vietnam-and-india-key-beneficiari" rel="noreferrer noopener">production beyond China</a>&nbsp;in India and Vietnam to dodge geopolitical tensions.&nbsp;
The iPhone maker has gained 8.4% in stock value in the last 12 months. Investors can gain exposure to the stock via Fidelity MSCI Information Technology Index ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/FTEC#NYSE">FTEC</a>) and IShares Global Tech ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IXN#NYSE">IXN</a>).
Price Action:&nbsp;AAPL shares are trading lower by 3.58% at $172.27 on the last check Thursday.
Also Read:&nbsp;<a target="_blank" href="https://www.benzinga.com/news/23/10/35154858/apple-rival-huawei-doubles-smartphone-sales-as-us-restrictions-prepare-to-kick-in" rel="noreferrer noopener">Apple Rival Huawei Doubles Smartphone Sales As US Restrictions Prepare to Kick In</a>
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo via Shutterstock

Tim Cook Launches New Apple Store in Shanghai as iPhone Struggles in China

Microsoft Corp&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>) has&nbsp;<a target="_blank" href="https://www.benzinga.com/government/24/01/36590298/microsoft-grapples-with-security-concerns-over-beijing-ai-lab" rel="noreferrer noopener">come under fire</a>&nbsp;from a second U.S. Senator, intensifying the scrutiny over its operations in China, especially after a Bloomberg Businessweek investigation revealed the extent of Bing search engine&#8217;s censorship within the country.&nbsp;
Senator Marco Rubio, a Republican from Florida, criticized Microsoft&#8217;s compliance with the Chinese government&#8217;s censorship demands, stating that no U.S. company should defend such actions.&nbsp;
This criticism follows revelations that Bing has increasingly filtered out content related to human rights, democracy, climate change, and more to align with Beijing&#8217;s policies, Bloomberg&nbsp;<a target="_blank" href="https://www.bloomberg.com/news/articles/2024-03-20/microsoft-attracts-growing-criticism-for-censoring-bing-in-china?srnd=technology-vp&amp;sref=TBDibEcD" rel="noreferrer noopener">reports</a>.
Also Read:&nbsp;<a target="_blank" href="https://www.benzinga.com/news/23/05/32280754/microsofts-linkedin-slashes-716-jobs-under-its-china-strategy" rel="noreferrer noopener">Microsoft&#8217;s LinkedIn Slashes 716 Jobs Under Its China Strategy</a>
Senator Rubio emphasized that American companies operating in China inadvertently support the Chinese Communist Party&#8217;s objectives against the United States.&nbsp;
Earlier, Senator Mark Warner, a Democrat from Virginia, urged Microsoft to consider ceasing Bing&#8217;s operations in China.
Human rights organizations have also voiced their unease, with Human Rights Watch urging Microsoft to disclose its content removal practices and reconsider its presence in China if it implicates them in human rights abuses.&nbsp;
Separately, executives at Microsoft, including CEO Satya Nadella and President Brad Smith, have discussed the future of their artificial intelligence lab in Beijing.&nbsp;
U.S. lawmakers, including Senator Josh Hawley and Representative Mike Gallagher, have warned about the risks associated with technological collaborations with China, particularly the misuse of AI by the Chinese government.
In 2023, Smith and China&#8217;s Commerce Minister Wang Wentao convened to deliberate on artificial intelligence and trade ties between the U.S. and China.&nbsp;
This meeting&nbsp;<a target="_blank" href="https://www.benzinga.com/government/23/12/36130092/microsoft-in-high-level-talks-with-china-a-new-era-for-ai-and-trade-cooperation-on-the-horizon" rel="noreferrer noopener">continues diplomatic efforts</a>&nbsp;following a discussion between U.S. President Joe Biden and Chinese President Xi Jinping, showcasing both countries&#8217; dedication to collaborating in areas such as AI and enhancing the business landscape for international firms.
Microsoft stock has gained over 55% in the last 12 months. Investors can gain exposure to the stock via&nbsp;IShares Global Tech ETF&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IXN#NYSE">IXN</a>) and&nbsp;Fidelity MSCI Information Technology Index ETF&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/FTEC#NYSE">FTEC</a>).
Price Action:&nbsp;MSFT shares are trading higher by 0.84% at $428.80 premarket on the last check Thursday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo via Shutterstock

Microsoft Faces Heat from US Senators Over Bing's Censorship in China

Microsoft Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NYSE">MSFT</a>) achieved a $3 trillion market valuation on Jan. 24, 2023, fueled by the burgeoning optimism in artificial intelligence (AI), marking a significant <a href="https://www.benzinga.com/markets">milestone in its journey. </a>
On Wednesday, Microsoft&#8217;s shares soared by 1.4% to $404, briefly propelling the company beyond the coveted $3 trillion mark and placing it in close competition with Apple Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>) for the title of the world&#8217;s most valuable company.
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="495" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/01/24131705/MSFT_2024-01-24_17-16-43_b4053-1024x495.png" alt="" class="wp-image-192972" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/01/24131705/MSFT_2024-01-24_17-16-43_b4053-1024x495.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/01/24131705/MSFT_2024-01-24_17-16-43_b4053-300x145.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/01/24131705/MSFT_2024-01-24_17-16-43_b4053-768x372.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/01/24131705/MSFT_2024-01-24_17-16-43_b4053-1536x743.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/01/24131705/MSFT_2024-01-24_17-16-43_b4053.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<h3 class="wp-block-heading">Microsoft&#8217;s Stellar Performance: A Closer Look</h3>
<ul>
<li>Market Valuation: Microsoft briefly outpaced Apple, the first company to reach a $3 trillion market cap, before settling back.</li>
<li>Yearly Growth: The company has seen an impressive 67% growth over the past year, matching its 2009 performance.</li>
<li>AI and Growth: Investors are particularly enthused by Microsoft&#8217;s prospects in AI, especially through its partnership with OpenAI Inc. AI-powered services are expected to drive significant growth in earnings and revenue.</li>
<li>Financial Outlook: Analysts forecast a revenue of $243.16 billion in 2024, a 14.7% year-on-year increase. Earnings per share (EPS) are predicted to reach 11.2, marking a 14.3% rise. The forward price-to-earnings ratio stands at 36x, close to its record high of 36.8x in November 2021.</li>
<li>Cash Reserves: Microsoft boasts a substantial cash reserve of $143.94 billion.</li>
</ul>
<h3 class="wp-block-heading">Exchange Traded Funds Exposed To Microsoft</h3>
Microsoft is a core holding in 513 ETFs, with U.S.-based ETFs owning 13% of Microsoft&#8217;s outstanding shares.
Microsoft holds a staggering 22% weight in the Technology Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLK#NYSE">XLK</a>). 
The tech giant has a substantial 21% stake in the Fidelity MSCI Information Technology Index ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/FTEC#NYSE">FTEC</a>) and a 20% weight in the iShares Global Tech ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IXN#NYSE">IXN</a>). 
N <a href="https://www.benzinga.com/markets/asia/24/01/36758819/chinese-stocks-rally-as-beijing-goes-all-in-on-financial-support-squeezes-short-sellers">Chinese Stocks Rally As Beijing Goes All-In On Financial Support, Squeezes Short Sellers</a>
Photo: Shutterstock

Microsoft Races To The Top, Hits $3-Trillion Valuation, Challenges Apple's Throne

Microsoft Corp&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/msft#NASDAQ">MSFT</a>) backed&nbsp;OpenAI&#39;s&nbsp;ChatGPT&nbsp;chatbot, which grabbed the attention of the global tech sector in early 2023, adept at answering questions and writing essays and poems, and image generator Dall-E 2, which turns language prompts into novel images.
The AI industry almost&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/news/23/02/30724753/chatgpt-effect-google-intensifies-ai-focus-with-latest-investment" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">triggered a battle</a>&nbsp;among the big tech companies like Microsoft&nbsp;and&nbsp;Alphabet Inc&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/goog#NASDAQ">GOOG</a>) (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/googl#NASDAQ">GOOGL</a>)&nbsp;Google&nbsp;in their bid to outdo each other. It mainly came when companies were busy downsizing their workforce and shelving projects and real estate presence amid macro uncertainties.
The ETFs with significant exposure to the ChatGPT stocks made handsome gains year-to-date.
SPDR Select Sector Fund - Technology&nbsp;(NYSE:&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/stock/xlk#NYSE" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">XLK</a>), iShares Global Tech ETF&nbsp;(NYSE:&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/stock/ixn#NYSE" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">IXN</a>), and&nbsp;Fidelity MSCI Information Technology Index&nbsp;ETF (NYSE:&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/stock/ftec#NYSE" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">FTEC</a>) gained ~20% YTD. The ETFs gained 15%-18% in the last six months and 5% the previous month.
The ETFs have 18%-24% exposure to Microsoft, 22%-23% exposure to&nbsp;Apple Inc&nbsp;(NASDAQ:&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/stock/aapl#NASDAQ" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">AAPL</a>), and 5%-6% exposure to Nvidia. Apple maintained a low profile in terms of its ChatGPT ambitions.
Analysts touted&nbsp;Nvidia Corp&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/nvda#NASDAQ">NVDA</a>) as a critical&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/analyst-ratings/analyst-color/23/02/30962419/nvidia-to-bask-in-glory-of-chatgpt-wave-analyst-says-ahead-of-4q-boosts-price-targe" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">gainer from the ChatGPT wave</a>.
Microsoft&#39;s new AI additions to its&nbsp;Bing&nbsp;search engine bore mixed results in February. Colossal AI search costs&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/news/23/02/31008543/colossal-artificial-intelligence-search-costs-pose-headwinds-for-googles-bard-and-microsofts-chatgpt" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">posed as additional headwinds</a>.&nbsp;
Last week, OpenAI made ChatGPT&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/news/23/03/31487866/openai-makes-chatgpt-capable-of-web-browsing-likely-to-expand-user-access-gradually" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">capable of web browsing</a>.
This week, China&#39;s&nbsp;Baidu Inc&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/bidu#NASDAQ">BIDU</a>)&nbsp;dumped&nbsp;the highly-<a class="editor-rtfLink" href="https://www.benzinga.com/news/23/03/31505390/chinas-baidu-ditches-public-launch-of-chatgpt-like-bot-whats-going-on" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">anticipated public launch</a>&nbsp;of its ChatGPT-like product,&nbsp;Ernie Bot.&nbsp;
Baidu&#39;s cancellation came weeks after founder Robin Li disappointed by marking Ernie Bot&#39;s debut via recorded video&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/news/23/03/31393598/baidus-chatgpt-counterpart-ernie-bot-impresses-analysts" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">instead of a real-time demo</a>.

BIDU

Following ChatGPT Announcement, These Artificial Intelligence Focused ETFs Show Strong Gains

When it comes to the FANG stocks, the &ldquo;A&rdquo; and the &ldquo;N&rdquo; &mdash; Amazon.com Inc. (NASDAQ: <a class="ticker" href="/stock/amzn#NASDAQ">AMZN</a>) and Netflix, Inc. (NASDAQ: <a class="ticker" href="/stock/nflx#NASDAQ">NFLX</a>) &mdash; are classified as consumer discretionary names. Conversely, the &ldquo;F&rdquo; and the &ldquo;G&rdquo; &mdash; Facebook Inc (NASDAQ: <a class="ticker" href="/stock/fb#NASDAQ">FB</a>) and Google parent Alphabet Inc (NASDAQ: <a class="ticker" href="/stock/goog#NASDAQ">GOOG</a>) (NASDAQ: <a class="ticker" href="/stock/googl#NASDAQ">GOOGL</a>) &mdash; reside in the technology sector.
Some investors believe the Global Industry Classification System (GICS) does not reflect Amazon and Netflix arguably being technology companies. As such, index providers Standard &amp; Poor&#39;s and MSCI, two of the largest providers of benchmarks for use by exchange traded funds (ETFs) issuers, are considering changes to the consumer discretionary, technology and telecommunications services sectors.
Those changes could alter the rosters in big-name sector ETFs, such as the Consumer Discretionary Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xly#NYSE">XLY</a>) and the Technology Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlk#NYSE">XLK</a>).
<h3>Sector-Level Happenings</h3>
In a recently completed consultation with investors, S&amp;P and MSCI&#39;s areas of focus included the media and Internet software &amp; services industries. On the cable and telecom side, Verizon Communications Inc. (NYSE: <a class="ticker" href="/stock/vz#NYSE">VZ</a>) resides in XLK while cable giant Comcast Corporation (NASDAQ: <a class="ticker" href="/stock/cmcsa#NASDAQ">CMCSA</a>) is a constituent in XLY, although the two companies are competitors.
&ldquo;MSCI and S&amp;P, the two firms that manage GICS, proposed creating a new communication services sector within GICS and completed an investment community consultation at the end of September to review how to classify all companies in the telecommunications services sector as well as portions of the consumer discretionary and information technology sector,&rdquo; said <a href="https://newpublic.cfraresearch.com/">CFRA Research</a> Director of ETF &amp; Mutual Fund Research Todd Rosenbluth in a note out Monday.
Alphabet and Facebook are major holdings in XLK while Amazon is by far the largest member of XLY&#39;s roster.
<h3>Wide-Ranging Impact</h3>
If the index providers decide to do some GICS shuffling, XLK and XLY will not be the ETFs to be affected. Rival sector ETFs from Fidelity, iShares and Vanguard would see roster changes as could an array of smart beta sector funds.
&ldquo;Any GICS shifts will create change for ETFs. Most of the assets in sector ETFs are tied to S&amp;P- or MSCI-based indices,&rdquo; said Rosenbluth. &ldquo;The effect of any change to GICS will be felt not only in the U.S., but also globally. iShares offers a suite of global sector ETFs tracking S&amp;P 1200 indices.&rdquo;
For example, the $1.5 billion iShares Global Tech ETF (NYSE: <a class="ticker" href="/stock/ixn#NYSE">IXN</a>) devotes about 15 percent of its combined weight to Facebook and Alphabet, but that ETF does not holds shares of Amazon or Netflix.
CFRA has a Marketweight rating on IXN and an Overweight rating on XLK.
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<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/10/10208784/a-new-spin-on-one-of-this-years-hottest-themes#/null">This New ETF Could Be a Star</a>

Long Ideas

CMCSA

NFLX

Select Sector SPDR-Consumer Discretionary

Some Big Sector ETFs Could Get New Looks

Pres. Elect Trump At Tech Summit Tells CEOs He's 'Here To See Them Do Well'

Speaking to Benzinga, Options <a href="http://marketfy.com/content/66938-sunday-night-update">Expert Nic Chahine</a> said that Tesla Motors Inc (NASDAQ: <a class="ticker" href="/stock/tsla#NASDAQ">TSLA</a>) is a short pick of his, and it&rsquo;s headed down in the way he expected.

	&ldquo;I could be headed lower. I would not be surprised to see $165 in the next couple of weeks especially if markets continue to correct,&rdquo; he said.

	Chahine said that the Street loves to trade Tesla on high valuation and based on innovated, but Chahine doesn&rsquo;t see the innovation in batteries.

	He also pointed out that any delays in the completion of the gigafactory could mean big negative impacts on revenues on what the Street expects.

	&ldquo;In uncertain times, traders are likely to throw away frothy names first,&rdquo; he said.

	Chahine prefers Alibaba Group Holding Ltd (NYSE: <a class="ticker" href="/stock/baba#NYSE">BABA</a>) to Tesla when it comes to momentum stocks.

	&ldquo;At least Alibaba has a story now and is not hoping on a good story down the line,&rdquo; he said.

	<a class="ftb-widget" data-height="400" data-widget-id="20b5UpgKvE9" data-width="600" href="http://companies.findthebest.com/l/12234646/Tesla-Motors-Inc-in-Palo-Alto-CA/#stock%20info&amp;s=1sLeQ7" style="font:10px/14px arial;color:#3d3d3d;" target="_blank">Tesla Motors Inc. - Stock Price and Volume | FindTheBest</a>
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Technicals

Exclusives

BABA

Options Expert Nic Chahine On Tesla: 'I Would Not Be Surprised To See $165 In The Next Couple Of Weeks'

In the last two months shares of Apple (NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>)stock have outpaced the market with a gain of 16.6 percent. A breakout last week has the company in positive territory for the year, sitting with a gain of nearly five percent in 2013.

	The recent rally from the lows has helped improve the chart on Apple in the short-term, but the stock remains 21 percent below the all-time high set in 2012. The question is whether the stock has more room to run or if the recent rally is merely a short-term bounce.

	Investors that would like a piece of Apple, but are weary that the company may still face some issues should consider an ETF with exposure to the stock.

	See also: <a href="http://www.benzinga.com/news/13/12/4118305/its-official-apple-is-in-positive-territory-for-the-year">It's Official, Apple is in Positive Territory for the Year</a>

	Below are four tech ETFs with the highest exposure to Apple stock.

	iShares U.S. Tech ETF (NYSE: <a class="ticker" href="/stock/iyw#NYSE">IYW</a>)

	The ETF that has the largest exposure to Apple stock is IYW, with an allocation of 17.8 percent. The heavy weighting towards Apple has held the ETF back slightly this year with a gain of 20 percent, lagging the overall market and the tech sector. Two other large-cap tech stocks also account for at least 10 percent of the portfolio. Google and Microsoft make up 21 percent of IYW. The ETF charges an annual expense ratio of 0.46 percent.

	SPDR Technology Sector ETF (NYSE: <a class="ticker" href="/stock/xlk#NYSE">XLK</a>)

	The top three holdings are the same as IYW with the only difference being a lower weighting for each stock. Apple accounts for 15.4 percent of the portfolio with GOOG and MSFT accounting for 18 percent. The ETF is also up 20 percent in 2013 and charges an annual expense ratio of 0.18 percent.

	Vanguard Information Technology ETF (NYSE: <a class="ticker" href="/stock/vgt#NYSE">VGT</a>)

	Another ETF with the same top three holdings is VGT. Apple makes up 14.1 percent of the ETF that charges an annual expense ratio of 0.14 percent. The ETF is up 25.3 percent this year, outpacing the first two ETFs by 25 percent. The lower expense ratio and more diverse portfolio helped the ETF to a better total return in the last eleven months.

	See also: <a href="http://www.benzinga.com/news/earnings/13/11/4091415/five-star-stock-watch-apple-inc">Five Star Stock Watch: Apple</a>

	iShares Global Tech ETF (NYSE: <a class="ticker" href="/stock/ixn#NYSE">IXN</a>)

	This ETF has the same three stocks as the top holdings, but a major difference is that IXN invests in companies based outside the U.S. There is currently 23 percent of the portfolio invested overseas, led by Japan at six percent.

	The portfolio allocation of Apple is 13.5 percent and MSFT and GOOG make up 16 percent. The expense ratio is 0.48 percent. The lower allocation to Apple and the international exposure did not help the ETF beat its peers, as it also gained 20 percent this year.

Riding Apple Rally with ETFs (AAPL, IYW, XLK, VGT, IXN)

Tuesday's big news in the technology sector will likely center around the unveiling of Apple's (NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>) iPhone 5S, the latest version of the popular smartphone.

	New product announcements from Apple have arguably lacked the excitement that was so evident when Steve Jobs was at the helm of the tech giant.

	Then again, recent entrants to shares of Apple probably are not complaining. Once again the largest U.S. company by market value, Apple has surged nearly 24 percent since the start of July. That has been good news for some of the ETFs with large allocations to the stock, but investors in those funds will undoubtedly be hoping Apple ETFs perform far better this year after the new iPhone is unveiled than after the iPhone 5 was introduced last year.

	Related: <a href="http://www.benzinga.com/news/earnings/13/04/3522083/a-guide-to-how-some-etfs-may-react-post-apple-earnings">A Guide To How Some ETFs May React Post-Apple Earnings</a>.

	Technology Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlk#NYSE">XLK</a>) 
	The $11.4 billion XLK is the largest tech ETF by assets and it does not skimp on its exposure to Apple. California-based Apple is 15.3 percent of XLK's weight, nearly double the weight given to XLK's second-largest holding, Google (NASDAQ: <a class="ticker" href="/stock/goog#NASDAQ">GOOG</a>).

	Although Google and several other top-10 holdings in XLK have been solid performers this year, XLK still ranks in the bottom half in terms of year-to-date performance <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/09/3884764/an-interesting-year-for-tech-etfs">among the nine sector SPDRs ETFs</a>. That alone is enough reason for investors to hope XLK improves upon the eight percent loss it incurred after the iPhone 5 was introduced through the end of 2012.

	Vanguard Information Technology ETF (NYSE: <a class="ticker" href="/stock/vgt#NYSE">VGT</a>) 
	With an expense ratio slightly below XLK's, the Vanguard Information Technology ETF is cheapest tech ETF on the market today. Its exposure to Apple is also well below that of XLK. VGT allocated 12 percent to the iPad maker at the end of the second quarter, <a href="https://personal.vanguard.com/us/FundsQuarterEndHoldings?FundId=0958&amp;FundIntExt=INT&amp;MonthEnd=false">according to Vanguard data</a>.

	Large ETF weights to Apple <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/01/3249669/apples-slide-highlights-advantages-of-equal-weight-etfs">have been proven to cut both ways</a> and when the stock fell after the iPhone 5 introduction, VGT was a little less bad than XLK with a loss of 7.1 percent. Year-to-date, VGT has outpaced XLK by 340 basis points.

	iShares U.S. Technology ETF (NYSE: <a class="ticker" href="/stock/iyw#NYSE">IYW</a>) 
	Although the iShares U.S. Technology ETF has over $2.4 billion assets, the fund is often forgotten in the Apple ETF conversation. That is perplexing because IYW has one of the <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/08/3820519/will-this-time-be-different-apple-back-to-dominating-tech-etf">largest Apple weights of any ETF</a>.

	At 18.3 percent, Apple is nearly twice as important IYW's fortunes as Google, the ETF's second-largest holding. Since IYW often carries the larges weight to Apple, it was noticeably worse than XLK or VGT after last year's iPhone announcement, losing 8.7 percent through the end of the year. However, IYW has gained 6.6 percent since the start of July.

	iShares Global Tech ETF (NYSE: <a class="ticker" href="/stock/ixn#NYSE">IXN</a>) 
	How "global" the iShares Global Tech ETF is is up for debate because the U.S. accounts for 78 percent of the fund's country weight. Still, IXN is a credible Apple ETF because, like XLK and IYW, the stock's weight in this ETF is nearly twice that of Google. Apple accounts for 13.6 percent of IXN's weight, more than triple the allocation given to the company's bitter rival, Samsung.

	IXN fell 4.2 percent through year end following the 2012 iPhone introduction, but the $557.4 million ETF is up 11.3 percent this year.

	For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

	Disclosure: Author does not own any of the securities mentioned here.

Short Ideas

Events

Global

Intraday Update

ETFs Look To Break Post-iPhone Blues

Usually a beacon of predictability and stability, particularly in volatile market environments, the consumer staples sector thrived in 2012. The bad new is not only has the group been lagging the broader market for a couple of months now, it is also richly valued.

In downgrading his view of the sector to Neutral from Overweight, iShares Global Chief Investment Strategist Russ Koesterich calls the premium staples stocks currently trade at "extreme."

"As people generally need to buy household items like toothpaste and soap even when the economy is weak, consumer staples stocks typically trade at a premium due to the stability of their earnings streams," wrote Koesterich in a note. "But today's premium looks extreme. Consumer staples is now the most expensive sector globally, trading at 3.4x price to book, nearly double the level of the global benchmark."

Adding to the potential disappointments for investors embracing staples stocks and ETFs at currently frothy levels is earnings growth. As in estimates for staples' earnings growth do not jibe with the lofty valuations the sector now sports. 

"Despite their rich valuation, earnings growth estimates for the sector are the third lowest of the 10 economic sectors," <a href="http://isharesblog.com/blog/2013/01/18/consumer-staples-don%E2%80%99t-overpay-for-safety/">wrote Koesterich</a>. 

Staples stocks are prized for low betas, dependable dividends and predictable earnings, but even with those favorable catalysts, the statistics support Koesterich's view that the group is richly valued.

Take the Consumer Staples Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlp#NYSE">XLP</a>). With over $5.6 billion in assets under management, XLP is the largest staples ETF by that metric. An ETF that devotes 42 percent of its combined weight to stodgy Procter &amp; Gamble (NYSE: <a class="ticker" href="/stock/pg#NYSE">PG</a>), Philip Morris (NYSE: <a class="ticker" href="/stock/pm#NYSE">PM</a>), Coca-Cola (NYSE: <a class="ticker" href="/stock/ko#NYSE">KO</a>) and Wal-Mart (NYSE: <a class="ticker" href="/stock/wmt#NYSE">WMT</a>) trades with a P/E ratio of almost 17 and a price-to-book value of 3.33, <a href="https://www.spdrs.com/product/fund.seam?ticker=XLP">according to State Street data</a>.

Conversely, the Technology Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlk#NYSE">XLK</a>), an ETF that allocates almost 23 percent of its combined weight to Apple (NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>) and Google (NASDAQ: <a class="ticker" href="/stock/goog#NASDAQ">GOOG</a>), has a <a href="https://www.spdrs.com/product/fund.seam?ticker=XLK">P/E ratio of just over 13</a>.

Pricey staples names is not just a U.S. phenomenon. The iShares S&amp;P Global Consumer Staples Sector Index Fund (NYSE: <a class="ticker" href="/stock/kxi#NYSE">KXI</a>) devotes almost half its weight to companies that are not based in the U.S., including Nestle (OTC: <a class="ticker" href="/stock/nsrgy#OTC">NSRGY</a>), British American Tobacco and Diageo (NYSE: <a class="ticker" href="/stock/deo#NYSE">DEO</a>). 

While KXI keeps with the staples tradition of being a low-beta offering (beta of 0.63), the ETF is another example of a richly value staples play. For the privilege of owning the aforementioned international stocks along with Procter &amp; Gamble, PepsiCo (NYSE: <a class="ticker" href="/stock/pep#NYSE">PEP</a>) and Altria (NYSE: <a class="ticker" href="/stock/mo#NYSE">MO</a>), among others, investors will have to deal with KXI's <a href="http://us.ishares.com/product_info/fund/overview/KXI.htm">P/E ratio of almost 20 and a price-to-book ratio of 5.86</a>. 

That is pricier than the iShares S&amp;P Global Technology Sector Index Fund (NYSE: <a class="ticker" href="/stock/ixn#NYSE">IXN</a>), where Apple and Google combine for over 20 percent, and the iShares S&amp;P Global Energy Sector Index Fund (NYSE: <a class="ticker" href="/stock/ixc#NYSE">IXC</a>). Koesterich has Overweight ratings on the global energy and technology sectors.

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Dividends

Downgrades

iShares Trust S&P Global Energy Sector Index Fund

iShares S&P Globalnsumer Staples Sector Index Fund

Nestle Sponsored representing Registered Shares Series B

NSRGY

Staples Stocks Looking Pricey, Says Koesterich 

Intel (NASDAQ: <a class="ticker" href="/stock/intc#NASDAQ">INTC</a>), which has faced slumping sales as the PC market weakens, is scheduled to report its fourth-quarter and full-year results Thursday, January 17, after the markets close. Investors will be looking for the semiconductor giant to provide any direction on the year ahead and an update on the search for a new chief executive.

Expectations

Analysts on average predict that Intel will report revenue for the quarter that slipped more than two percent year-over-year to $13.53 billion. Per-share earnings are expected to come to $0.45, which would be more than 29 percent lower than in the same quarter of last year. That consensus earnings estimate is the same as it was 30 days ago. But note that analysts have underestimated earnings per share (EPS) in the past ten quarters. The third-quarter EPS of $0.58 beat the consensus estimate by about 16 percent.

Intel attributed its slumping third-quarter results to the "continuing tough economic environment" as the "world of computing is in the midst of a period of breakthrough innovation and creativity." The company lowered its sales guidance for the fourth quarter, despite the impending launch of Windows 8, and warned of weakening gross margins. The share price dropped almost five percent in the days following the third-quarter report.

The analysts' consensus full-year forecast calls for $2.10 per share earnings on revenue of $53.43 billion. That would be down from $2.39 per share and $54.00 billion in the previous year. That consensus EPS estimate has ticked down in the past 60 days from $2.11.

The Company

Intel is still the world's largest semiconductor chip maker. The company markets its products primarily to original equipment manufacturers, original design manufacturers, and industrial and communications equipment manufacturers in the computing and communications industries. This Dow Jones Industrial Average component was founded in 1968 and is headquartered in Santa Clara, California. Paul Otellini has been the president and chief executive since 2005.

Competitors include Advanced Micro Devices (NYSE: <a class="ticker" href="/stock/amd#NYSE">AMD</a>) and Texas Instruments (NASDAQ: <a class="ticker" href="/stock/txn#NASDAQ">TXN</a>). Both companies are scheduled to report their four-quarter results next week. Analysts predict they will say that revenues sank more than 12 percent from a year ago. Texas Instruments' EPS are expected to have declined about 29 percent while AMD is expected to post a net loss.

During the three months that ended in December, Intel set a deal to work with Comcast (NASDAQ: <a class="ticker" href="/stock/cmcsa#NASDAQ">CMCSA</a>) and other cable operators to develop and deploy new set-top boxes, announced that the CEO will retire in May and announced a senior note offering, in part, so it can repurchase shares of its common stock.

Performance

Intel's long-term EPS growth forecast is about nine percent, and the price-to-earnings (P/E) ratio is less than the industry average. The operating margin is greater than the industry average, and the return on equity is about 25 percent, while the return on investment is more than 19 percent. The number of shares sold short, as of the end of December, represents more than four percent of the float. The days to cover was about six, the highest in a year.

Of the 10 analysts surveyed by Thomson/First Call who follow the stock, seven recommend buying shares and none recommends selling. The current share price has overrun the mean price target, or where analysts expect the stock to go. But the high price target still represents more than nine percent potential upside. Other individual price targets could come up if Intel manages to surprise with some good news in its report.

The share price has risen about 13 percent since hitting a 52-week low in November. However, shares are still trading more than 12 percent lower than a year ago. The share price is above the 50-day moving average. Over the past six months, the stock has outperformed AMD but underperformed Texas Instruments and the DJIA.

Guidance

Previews

INTC

NXPI

Intel Earnings Preview: Weak Fourth Quarter Expected

Shares of personal computer maker Dell (NASDAQ: <a class="ticker" href="/stock/dell#NASDAQ">DELL</a>) surged on speculation CEO and founder Michael Dell is mulling a plan to take his company private. While Texas-based Dell would not comment on the rumor, the corresponding headlines were enough to lift other technology stocks including Microsoft (NASDAQ: <a class="ticker" href="/stock/msft#NASDAQ">MSFT</a>) and Dell rival Hewlett-Packard (NYSE: <a class="ticker" href="/stock/xlk#NYSE">XLK</a>).

Despite Dell having a market capitalization of nearly $22 billion, the stock does not receive significant allocations in many marquee ETFs that track the technology sector. However, when the likes of Dell, Microsoft and Hewlett-Packard are combined, the resulting number is often a decent portion of some of the most popular technology sector ETFs.

For example, the Technology Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlk#NYSE">XLK</a>) rose to near its highest levels of Monday's session following the Dell headlines. The aforementioned trio of old school technology giants combine for 8.4 percent of XLK's weight.

The often overlooked SPDR Morgan Stanley Technology ETF (NYSE: <a class="ticker" href="/stock/mtk#NYSE">MTK</a>) soared to its high of the day after the Dell news broke. MTK, which has $170.45 million in assets under management, features a 2.94 percent weight to Dell, one of the largest weights to that stock among ETFs, and a 3.16 percent weight to Hewlett-Packard.

The iShares S&amp;P Global Technology Sector Index Fund (NYSE: <a class="ticker" href="/stock/ixn#NYSE">IXN</a>) rose modestly following the Dell news, but like XLK and the PowerShares QQQ (NASDAQ: <a class="ticker" href="/stock/qqq#NASDAQ">QQQ</a>), IXN is still in the red today. IXN features only modest weights to Dell and HP, but does have almost 6.3 percent weight to Microsoft.

The iShares Dow Jones U.S. Technology Sector Index Fund (NYSE: <a class="ticker" href="/stock/iyw#NYSE">IYW</a>) also pared its intraday losses on the Dell headlines even though the stock represents just 0.69 percent of the ETF's weight. 

IYW, QQQ and XLK feature some of the largest weights to Apple (NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>) among all ETFs and a 3.3 percent slide in that stock is proving to be too much for those ETFs to overcome today.

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

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iShares Global Tech ETF

Overview

iShares Global Tech ETF (ARCA:IXN), Quote.Headers.trade-ideas