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Traders weigh chasing rally in Microsoft after stock passes all-time high in late trading

The "Fast Money" traders debated whether it's worth chasing the rally in Microsoft after the company posted an earnings beat driven by continued growth in its cloud business.

The stock climbed above its 1999 all-time high of $59.97 in extended trade.

Trader Brian Kelly said he would not chase the rally in Microsoft, but would be interested in it on a pullback.

"Everything that these guys said is exactly what everybody in this market now wants. There's very few stocks out there that have this type of growth, that have a dividend, that have a strong management team ... so Microsoft is going to attract a lot of investment money," Kelly said.

Trader Karen Finerman agreed, but added that Microsoft's current valuation — about a 27 price-to-earnings ratio on a trailing basis — is much more appetizing than it was 17 years ago.

Trader Dan Nathan said that a large portion of Microsoft's revenue still comes from its legacy businesses and that the current valuation is still too rich. He said there's a risk that the growth of the cloud business could slow down.

Trader Tim Seymour disagreed, saying that Microsoft could still increase margins and market share.


Disclosures:

KAREN FINERMAN

Karen Finerman is long AAL, BAC, C, DAL, long DB calls, FB, FL, GOGO, GOOG, GOOGL, JPM, LYV, KORS, KORS calls, KORS puts, M, MA, SEDG, SPY puts, UAL, URI, WIFI long call spreads. Her firm is long ANTM, AAPL, BAC, C, C calls, FB, GOOG, GOOGL, JPM, JPM calls, KORS, LYV, M, MOH, PLCE, SPY puts, URI, WIFI. Her firm is short IWM, MDY. Finerman is on the board of GrafTech International.

DAN NATHAN

Dan Nathan is TWTR long, PYPL long Oct calls, XHB long Jan put spread, XLU long Dec call Spread, XLK long Jan put spread, XRT long Jan put spread, PG long Dec put spread, EEM long Nov put spread.

BRIAN KELLY

Brian Kelly is long Bitcoin, SLV and Silver Futures, US Dollar UUP. He is short the euro and Japanese yen.

TIM SEYMOUR

Tim Seymour is long ABX, APC, AVP, BAC, BBRY, CLF, DO, DVYE, EDC, EWZ, F, FB, FCX, FXI, GM, GOOGL, GE, INTC, LQD,MCD, MUR, OIH, PG, RACE, RAI, RH, RL, SINA, T, TWTR, VALE, VZ, XOM. short: SPY, XRT. His firm is long ABX, BABA, BIDU, CBD, CLF, EWZ, F, KO, MCD, MPEL, NKE, PEP, PF, SAVE, SBUX, SINA, VALE, VIAB, WMT, WEN, X, YHOO, short EWG, HYG, IWM