Options traders expect a roughly $190 billion swing in Microsoft's market value after it reports earnings on Wednesday, an unusually large move that underscores investors' growing eagerness to see if billions of dollars in AI spending are beginning to pay off.
The tech company's options imply a move of about 6.6% in either direction after the company reports fourth-quarter results. By comparison, over the last 12 earnings cycles, Microsoft has averaged a 4.8% implied move and a 4.4% actual move, Option Research & Technology Services (ORATS) data showed. The significantly higher pricing this quarter suggests that investors view Microsoft - one of the hyperscalers whose massive AI capital spending is at the heart of this year's AI rally and the broader bull market - as central to the AI earnings story. With the AI trade now faltering, investors who flocked to technology stocks are growing wary of ever-rising costs. At their current trajectory, the hyperscalers are expected to spend more combined on capital expenditures than they generate in free cash flow by 2027, Reuters reported last week.
