Microsoft Is the Surprise Winning Tech Stock This Quarter
June 28 2019 - 5:30PM
Dow Jones News
By Gunjan Banerji
One of the hottest tech stocks in the second quarter isn't what
you might think.
It's Microsoft Inc., which passed Apple as the most valuable
company in the U.S. by market capitalization in April and has held
the position since. Its market value topped $1 trillion this
quarter and currently sits above that of Amazon, which is worth
about $932 billion, according to FactSet data as of Friday.
Microsoft isn't one of the beloved companies in the so-called
FAANG group, which investors often turn to for exposure to
fast-growing companies and a sector that is rapidly evolving. FAANG
stocks include Facebook Inc., Apple Inc., Amazon.com Inc., Netflix,
Inc. and Google-parent Alphabet Inc.
But Redmond, Wash.-based Microsoft has been the second-best
performer in the Dow Jones Industrial Average in the second
quarter. Shares of the software company have surged 13.6% over the
past three months as strong earnings and optimism about the future
of cloud-computing businesses have lifted it to new highs. Its
shares hit a record $137.78 on June 24.
Microsoft's gain topped all the FAANG stocks but one, Facebook,
which is up almost 16% as of Friday. To compare, the S&P 500's
technology sector rose roughly 6% this quarter, and the broader
index has gained 3.8%.
Some investors seem to think this could last. Most analysts
tracking Microsoft stock have a bullish outlook on it, FactSet data
show. And analysts have recently increased the target share prices
for the company, in anticipation of even stronger sales.
Microsoft Chief Executive Satya Nadella has emphasized cloud
computing as slowing sales of its Windows operating system led the
company to expand to other areas. The company has benefited from a
trend among customers of subscribing to applications in the cloud
rather than purchasing software licenses.
The tech sector has been the best-performing in the S&P 500
this year but can be prone to dramatic swings, leading major U.S.
indexes up but also dragging them lower when investors grow
jittery. However, looking outside of the widely-watched tech
acronym FAANG would have been a winning strategy this quarter.
Write to Gunjan Banerji at Gunjan.Banerji@wsj.com
(END) Dow Jones Newswires
June 28, 2019 17:15 ET (21:15 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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