Microsoft Revises Sales Guidance On Coronavirus: ETFs In Focus

After Apple (AAPL - Free Report) , it is Microsoft (MSFT - Free Report) which has announced that it won't meet its sales forecast for the March quarter due to the impacts of coronavirus. The "uncertainty related to the public health situation in China” has weighed on Microsoft's Windows and Surface hardware businesses. Though Microsoft shares were up 1.3% in the key trading session on Feb 26, shares lost about 2% after hours.

During its earnings call, Microsoft issued quarterly revenue guidance for the personal computing segment between $10.75 billion and $11.15 billion. The company also highlighted that its previous guidance “included a wider than usual range to reflect uncertainty related to the public health situation in China.”

What's Ahead for Microsoft-Heavy ETFs?

Against this backdrop, ETFs heavy on this tech behemoth may face tensions in the near term. However, the long-term fundamental is pretty strong for the tech giant. It is an immensely cash-rich company and is poised to benefit from the cloud business greatly.

Microsoft is also catching up with the industry leader Amazon (AMZN - Free Report) . Microsoft’s cloud market share went up from 14.2% in 2018 to 16.9% in 2019 while AWS’ 2019 share was 32.7% versus 32.3% in 2018.

So, investors with a strong stomach for risks may consider the latest selloff in Microsoft as a buying point. We have highlighted below a few ETFs with double-digit exposure to Microsoft.

Select Sector SPDR Technology ETF (XLK - Free Report)

This most-popular technology ETF follows the Technology Select Sector Index. The fund charges 13 bps in fees per year from investors. It holds about 71 securities in its basket, with Microsoft occupying the second position at 19.2%. XLK has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.

iShares U.S. Technology ETF (IYW - Free Report)

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