Microsoft Stock: Bullish Bets Pile Up Before September

Core Viewpoint - Microsoft continues to be a leading player in the artificial intelligence sector, with its recent earnings report reinforcing its premium valuation and potential for a bullish rebound in September [1][3]. Financial Performance - The company reported a year-over-year operating cash flow (OCF) growth of over 14% in its fiscal year fourth quarter, with an OCF margin of 55.79%, which is 75 basis points higher than the 32% reported in FYQ2 [8]. - Free cash flow increased by 10% year-over-year in the last quarter, supported by a slowing growth rate in capital expenditure (CapEx) for data centers [9]. Stock Performance and Analyst Ratings - Microsoft stock is currently priced at $515.91, with a 12-month price forecast of $609.86, indicating a potential upside of 17.70% based on 32 analyst ratings [6]. - The highest price target from analysts is $675, representing a 30% upside from the current stock price [7]. Options Market Sentiment - The options chain for Microsoft shows a bullish bias, with call volumes significantly higher than put volumes at various near-term strike prices, indicating traders are optimistic about the stock's performance [4][5]. - Implied volatility is rising, suggesting that traders are willing to pay for more upside exposure, further supporting bullish sentiment [5]. Market Context - September is historically a volatile month for stocks, with ongoing concerns about tariffs, inflation, and interest rates potentially impacting market performance [10]. - A potential "death cross" is forming for Microsoft stock, which could indicate a buying opportunity for investors, although it may also signal a continuation of a downtrend [11][13].