A resurgent Microsoft Corp. (NASDAQ: MSFT) has picked up some fans on Wall Street, at least if short interest in its stock is any measure. It dropped 9 million to 71.4 million in the period that ended September 30.

Microsoft’s stock price is another indication of the optimism. Its shares trade at $47, against a 52-week range of $39.72 to $50.05. Despite a poor market for tech stocks, Microsoft shares have also well outperformed the Nasdaq over the past three months.

Among the reasons for the strength is Wall Street’s belief that CEO Satya Nadella can execute his three strategies. The first is to press further into the consumer hardware business. Microsoft has just released the Surface Book tablet, which it claims will outperform any rival, which presumably includes the Apple Inc. (NASDAQ: AAPL) MacBook.

Microsoft management said:

Building on its track record of pioneering new categories, Microsoft is redefining the laptop with the new Surface Book — a powerful, high-performance laptop with stunning craftsmanship and incredibly accurate and responsive pen and touch support. Ultrathin, Surface Book combines the impressive power of 6th Generation Intel® Core™ i5 and Core™ i7 processors with up to 12 hours of battery life.

Nadella next initiative is to press further into cloud computing. Even though investors believe that the cloud is critical to every large tech company, the sector is crowded with successful market leaders, which range from Amazon.com Inc. (NASDAQ: AMZN) to desperate old tech companies such as International Business Machines Corp. (NYSE: IBM). Worry is that with so many large corporations competing for the same market, pricing will become commoditized and therefore will drop.

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Finally, and less well promoted, Microsoft continues to play to its traditional businesses, Windows 10 and its suite of products for businesses. Although slowly fading, these still represent a huge portion of Microsoft’s earnings.

Nadella has set the right combination of businesses, at least as far as the new snapshot of short interest shows.

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