Microsoft's $74 Billion AI Surprise? ETFs Bet Big On Azure's Secret Weapon

With Microsoft MSFT preparing to report fourth-quarter results after markets close today, expectations are high, both for the tech giant and the ETFs riding its AI wave. Wall Street analysts are estimating revenue of $73.8 billion and earnings per share of close to $3.37.

Azure’s cloud growth is expected to be 34–35%, with much of it attributed to the company’s aggressive expansion in generative AI, according to Investors Business Daily.

While, however, investors scrutinize Microsoft’s figures, AI-themed ETFs are already getting a tailwind.

AI ETFs In Focus

Thematic ETFs such as the Global X Artificial Intelligence & Technology ETF AIQ and ROBO Global Artificial Intelligence ETF THNQ have recently gained popularity, with Microsoft frequently being among their top holdings. AIQ, for example, has Microsoft in its highest 10 and has risen 3% in the last month and 17% year-to-date, mirroring the wider turnaround in AI sentiment. THNQ is up more than 3% in the last month and 16% YTD, although the fund is diversified with mostly equal weightages given to each holding.

The other significant ETF, Dan Ives’ Wedbush AI Revolution ETF IVES, which launched in June, also has Microsoft as one of its main exposure points. Although still in its infancy, IVES has already collected almost $400 million in AUM, capitalizing on the AI boom story.

Also Read: Beyond Magnificent 7: Can Thematic ETFs Like IVES Lead The Next Wave Of AI Investing? CIO Cullen Rogers Explains

Why Azure Matters To ETFs

Azure’s performance has become a proxy for Microsoft’s execution on enterprise AI demand. With offerings such as Copilot for Office 365 and collaborations with OpenAI, Azure is rapidly emerging as the heartbeat of Microsoft’s AI monetization plan. Any upside surprise in the growth of Azure might trigger a ripple effect in AI ETFs with heavy Microsoft allocations or those concentrated in enterprise AI plays.

On the other hand, any indication of slowdown, particularly with continued cost pressures, would put ETFs with significant exposure to the stock under heavy pressure.

In brief, Microsoft’s earnings are a read on the overall AI investing universe. And ETFs, especially thematic AI indexes, are right in the middle.

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