Microsoft Could Be the Next Big AI Winner as Smart Money Loads Up on Calls | Smart Money Option

This year, the AI rally in U.S. equities has been largely dominated by chip stocks such as Nvidia and Broadcom, while Microsoft’s stock performance has actually been relatively muted. Compared with other Mag7 names that continue hitting fresh all-time highs, Microsoft has significantly lagged year-to-date, leading some investors to question when the company’s massive AI investments will truly translate into earnings growth.

But just as the market began underestimating Microsoft, institutional money appears to have started positioning ahead of time.

On Thursday, Microsoft shares jumped more than 3%, but what truly caught the market’s attention was a series of unusually large institutional options trades. The most notable was a massive long-dated call spread involving 7,870 contracts: buying the December 2027 $610 calls while simultaneously selling the December 2027 $720 calls. The two legs were executed almost simultaneously, representing more than $300 million in notional exposure and nearly $10 million in net premium outlay.

Click here to view MSFT's options.

This is a very typical long-term institutional AI positioning trade. Instead of aggressively buying naked calls, the trader chose to reduce premium costs by selling the higher-strike $720 calls. That suggests the real bet is not on a short-term speculative spike in Microsoft shares, but rather on significant long-term AI re-rating potential over the next two years, with a more sustainable upward trend.

In other words, institutions may be repositioning around a new narrative:

While the market has been aggressively chasing GPUs, HBM, and AI hardware plays, platform companies like Microsoft — which can actually monetize AI at the enterprise level — could become some of the most important re-rated assets in the next phase of the AI trade.

Meanwhile, Microsoft’s AI catalysts continue to build. Reports suggest the company is advancing a next-generation AI coding model and plans to further integrate it into the GitHub Copilot ecosystem, while continuing to strengthen Azure AI capabilities. As enterprise AI adoption moves from experimentation toward deployment, Wall Street has also begun raising expectations for Microsoft’s long-term AI revenue potential.

More importantly, short-term options flow was also notably bullish. The market saw multiple large sweeps in the June 2026 $435 and $440 calls, including a single $440 call trade worth more than $9 million. At the same time, parts of the $435 call positioning appeared to be rolling higher, suggesting some traders are moving exposure into higher strikes to continue chasing upside in Microsoft’s AI trade.

Click here to view MSFT's options.

This type of activity usually signals that investors are increasing expectations for further upside.

For investors, the market is no longer simply trading Microsoft’s traditional software business. Increasingly, it is trading Microsoft’s strategic position and pricing power within the global AI ecosystem. And if the next phase of the AI rally shifts from hardware toward enterprise applications and platform monetization, Microsoft — despite lagging earlier in the cycle — could become one of the most important AI core assets to watch.

Based on this latest options activity, some institutions clearly appear to be positioning ahead of that shift.

Click here for more unusual options activities.

Disclaimer: Options trading entails significant risk and is not appropriate for all customers. It is important that investors read the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Opening new options positions close to or on their expiration date comes with substantial risk of losses for reasons that include potential volatility of the underlying security and limited time to expiration. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period. Certain complex option strategies carry additional risk, including potential losses that may exceed the original investment amount. If applicable, supporting documentation for any claims will be furnished upon request.

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