What Happened?
Shares of tech giant Microsoft (NASDAQ:MSFT) jumped 4% in the afternoon session after President Trump announced a $500 billion Stargate project (Joint Venture with OpenAI, Oracle and SoftBank) to develop artificial intelligence infrastructure in the United States. UBS analyst Timothy Arcuri thinks players such as Nvidia would significantly benefit, likely as the supplier of critical semiconductor chips powering some of the anticipated infrastructure requirements, including data centers. As a result, it is not hard to project the anticipated gains from hyperscalers such as Oracle, Microsoft and other cloud platforms. Overall, the deal should accelerate demand for builders and innovators within the AI space.
Also buoying the tech sector was Netflix. The company reported strong Q4 earnings results. Specifically, global streaming paid membership exceeded Wall Street expectations, with a strong net add figure (18.9 million vs. estimates of 9.8 million). This led to a revenue and EPS beat in the quarter. Additionally, revenue guidance for 2025 beat expectations, and the company spoke optimistically about multiple vectors such as ad revenue, live events, and new content. Overall, the results were impressive.
After the initial pop the shares cooled down to $445.83, up 4% from previous close.
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What The Market Is Telling Us
Microsoft’s shares are somewhat volatile and have had 11 moves greater than 2.5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
Microsoft is up 6.5% since the beginning of the year, and at $445.83 per share, it is trading close to its 52-week high of $467.56 from July 2024. Investors who bought $1,000 worth of Microsoft’s shares 5 years ago would now be looking at an investment worth $2,691.
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