Microsoft (NASDAQ:MSFT) stock is one of today’s top-trending stocks and not for a good reason. It is down slightly after large swaths of computers running Windows crashed, causing widespread service disruptions. Triggered by a faulty update initiated by IT security company CrowdStrike (NASDAQ:CRWD), the outages affected entities in many countries.
CRWD stock is sinking 12% in early trading on the news. MSFT stock, however, is down a mere 0.5% as of this writing.
The Impact of the “Largest IT Outage in History”
Due to the crashes of so many Windows systems, banks, TV stations, airports, and many other businesses around the world suffered onerous IT issues.
United (NASDAQ:UAL), Delta (NYSE:DAL), and American Airlines (NASDAQ:AAL) all grounded their flights worldwide, and the U.K.’s Sky News channel went off the air.
A software update from CrowdStrike is reportedly behind the crashes of the Windows systems. The update is believed to have been “misconfigured/corrupted.”
In a statement on X, formerly Twitter, issued around 6:00 a.m. ET, CrowdStrike CEO George Kurtz wrote that “CrowdStrike is actively working with customers impacted by a defect found in a single content update for Windows hosts.” He noted that “This is not a security incident or cyberattack” and asserted that “the issue has been identified, isolated and a fix has been deployed.”
The Potential Long-Term Impact on MSFT Stock and CRWD Stock
Of course, Microsoft has been in business for several decades, and its Windows operating system is installed on about 73% of all desktops globally. In light of these points, I don’t expect today’s outage to significantly impact Microsoft’s financial results or MSFT stock.
Conversely, CrowdStrike was founded only in 2011, so its track record is much shorter than that of Microsoft. Also importantly, today’s outage appears to primarily be CrowdStrike’s fault. Moreover, CRWD stock has a huge forward price-to-earnings ratio of 85.5 times.
In light of these points, I believe that today’s outage could have a meaningful, negative impact on CrowdStrike’s financial results and CRWD stock.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
