Traders Buy High Volume of Microsoft Call Options (NASDAQ:MSFT)

Microsoft Corporation (NASDAQ:MSFT) was the target of unusually large options trading activity on Friday. Investors bought 586,432 call options on the stock. This represents an increase of approximately 56% compared to the average daily volume of 376,264 call options.

Key Headlines Impacting Microsoft

Here are the key news stories impacting Microsoft this week:

• Positive Sentiment: Large commercial deals and partnerships underpin continued demand — Microsoft landed a major cloud customer agreement (Perplexity, reported as a $750M deal), which demonstrates Azure can win sizable AI workloads and supports future revenue. Perplexity signs $750 million AI cloud deal with Microsoft
• Positive Sentiment: Long-term AI opportunity remains large — analysts and commentators note that potential liquidity events (e.g., an OpenAI IPO) and continued hyperscaler AI demand could boost infrastructure spending that benefits Microsoft’s cloud and services over time. Could A $1 Trillion OpenAI IPO Save The Day For Nvidia, Microsoft?
• Positive Sentiment: Backlog/RPO growth signals demand — Microsoft’s commercial remaining performance obligations (backlog) jumped materially year-over-year, implying multi-year contracted revenue tied to AI workloads. Microsoft demand backlog doubles to $625 billion
• Neutral Sentiment: Quarterly results were solid but mixed — MSFT beat on revenue and EPS (Q2 results) yet the company issued guidance and commentary that implied a modest moderation in Azure growth vs. prior quarter; the market is parsing growth vs. the cost profile. Microsoft Q2 earnings beat on top and bottom lines
• Neutral Sentiment: Options and sentiment flows amplify moves — unusually high call-option buying and heavy volume have increased intraday volatility and may accentuate both selloffs and snapbacks. Stock Of The Day: Is This The Bottom For Microsoft?
• Negative Sentiment: Investor backlash to capex and margin risk — the core negative: investors punished MSFT because AI capex jumped (reported ~$37.5B in the quarter) while Azure growth showed signs of slowing, raising doubts about near-term returns. That drove a sharp selloff and a big market-cap contraction. Microsoft tumbled 10% in a day and isn’t recovering premarket. Here’s why
• Negative Sentiment: Analyst cuts & guidance uncertainty — several firms trimmed price targets or flagged near-term Azure/margin risks, increasing downside pressure even as many maintain buy ratings longer term. These Analysts Slash Their Forecasts On Microsoft Following Q2 Results
• Negative Sentiment: Legal/investor scrutiny follows the shock drop — law firms have opened investigations and class-action notices have surfaced, which can keep sentiment fragile near-term. Microsoft Corporation Investigated on Behalf of Investors

Analyst Ratings Changes

MSFT has been the subject of a number of recent analyst reports. BMO Capital Markets cut their price target on shares of Microsoft from $625.00 to $575.00 and set an “outperform” rating for the company in a research note on Thursday. UBS Group restated an “outperform” rating on shares of Microsoft in a research note on Thursday. Mizuho decreased their target price on shares of Microsoft from $640.00 to $620.00 and set an “outperform” rating on the stock in a research report on Wednesday, January 21st. Robert W. Baird set a $540.00 price target on Microsoft and gave the stock an “outperform” rating in a research report on Thursday. Finally, Evercore ISI reduced their price target on shares of Microsoft from $640.00 to $580.00 and set an “outperform” rating on the stock in a research report on Thursday. One investment analyst has rated the stock with a Strong Buy rating, forty have given a Buy rating and three have assigned a Hold rating to the stock. According to data from MarketBeat.com, the company currently has a consensus rating of “Moderate Buy” and an average price target of $597.73.

Microsoft Price Performance

Shares of NASDAQ:MSFT opened at $430.29 on Friday. The firm’s fifty day moving average is $475.83 and its 200-day moving average is $499.71. Microsoft has a 52 week low of $344.79 and a 52 week high of $555.45. The firm has a market cap of $3.20 trillion, a PE ratio of 26.91, a price-to-earnings-growth ratio of 1.74 and a beta of 1.07. The company has a debt-to-equity ratio of 0.09, a quick ratio of 1.39 and a current ratio of 1.39.

Microsoft (NASDAQ:MSFT) last released its quarterly earnings results on Wednesday, January 28th. The software giant reported $4.14 earnings per share (EPS) for the quarter, topping the consensus estimate of $3.86 by $0.28. The firm had revenue of $81.27 billion during the quarter, compared to analyst estimates of $80.28 billion. Microsoft had a net margin of 39.04% and a return on equity of 32.34%. The company’s revenue was up 16.7% compared to the same quarter last year. During the same quarter last year, the business earned $3.23 EPS. Sell-side analysts predict that Microsoft will post 13.08 earnings per share for the current year.

Microsoft Dividend Announcement

The business also recently declared a quarterly dividend, which will be paid on Thursday, March 12th. Shareholders of record on Thursday, February 19th will be paid a $0.91 dividend. This represents a $3.64 annualized dividend and a yield of 0.8%. The ex-dividend date of this dividend is Thursday, February 19th. Microsoft’s payout ratio is 22.76%.

Insider Activity at Microsoft

In other news, EVP Takeshi Numoto sold 2,850 shares of the stock in a transaction dated Thursday, December 4th. The shares were sold at an average price of $478.72, for a total transaction of $1,364,352.00. Following the completion of the transaction, the executive vice president directly owned 55,782 shares in the company, valued at $26,703,959.04. This represents a 4.86% decrease in their position. The transaction was disclosed in a filing with the SEC, which is available at the SEC website. Also, insider Bradford L. Smith sold 38,500 shares of the stock in a transaction that occurred on Monday, November 3rd. The shares were sold at an average price of $518.64, for a total value of $19,967,640.00. Following the transaction, the insider directly owned 461,597 shares of the company’s stock, valued at $239,402,668.08. This trade represents a 7.70% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. Over the last 90 days, insiders sold 54,100 shares of company stock valued at $27,598,872. Corporate insiders own 0.03% of the company’s stock.

Institutional Inflows and Outflows

A number of hedge funds have recently made changes to their positions in the business. Secured Retirement Advisors LLC boosted its stake in Microsoft by 2.7% during the 4th quarter. Secured Retirement Advisors LLC now owns 14,487 shares of the software giant’s stock valued at $7,006,000 after purchasing an additional 376 shares during the last quarter. Sigma Planning Corp grew its position in Microsoft by 0.3% during the fourth quarter. Sigma Planning Corp now owns 135,011 shares of the software giant’s stock valued at $65,425,000 after buying an additional 340 shares during the period. Cullinan Associates Inc. grew its position in shares of Microsoft by 0.4% during the 4th quarter. Cullinan Associates Inc. now owns 177,745 shares of the software giant’s stock valued at $85,961,000 after acquiring an additional 680 shares during the period. Belleair Asset Management LLC purchased a new stake in Microsoft in the fourth quarter worth $1,260,000. Finally, North Star Investment Management Corp. increased its holdings in Microsoft by 2.0% in the 4th quarter. North Star Investment Management Corp. now owns 95,719 shares of the software giant’s stock worth $46,292,000 after acquiring an additional 1,884 shares during the last quarter. 71.13% of the stock is currently owned by institutional investors and hedge funds.

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).