10 AI Stocks on Investors’ Radar In January 2025

2. Microsoft Corp (NASDAQ:MSFT)

Number of Hedge Fund Investors: 279

Ben Bajarin from Creative Strategies said while talking to Schwab Network in a latest program that it will take time for Microsoft (MSFT) to see traction of its AI products in the enterprise space.

“Microsoft Corp (NASDAQ:MSFT) play is really at the edge; it’s really around co-pilot. You know, you’ve got an Enterprise play for co-pilot, and you’ve got a consumer play that comes with, you know, some with Windows, some as well with a Windows subscription. It’s hard right now when we talk about software and the broader Spectrum for AI adoption. We’re not seeing Enterprises, for example, just deploy at scale yet across their Enterprises. So, you see a range of surveys from any number of CIO and CTO surveys saying that they have plans to roll out co-pilot. Those are still in just project mode. Once they start to roll these things out, we’ll really see if a big portion of that Enterprise starts to add those fees for co-pilot to their Microsoft Corp (NASDAQ:MSFT) 365 subscriptions. You’re going to see that, right? That’s going to come out in numbers. So, I think it’s a wait-and-see but optimistic play.”

RiverPark Large Growth Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q3 2024 investor letter:

“Microsoft Corporation (NASDAQ:MSFT): MSFT was a top detractor in the third quarter following a fiscal fourth quarter earnings report that featured inline operating metrics but mixed guidance. Positively, the company reported strong revenue (+15%) and earnings growth (+10%), powered by Azure (+30%), and operating margins of 43%. Guidance however calls for lower than expected fiscal first quarter Azure revenue as infrastructure constraints limit growth, and higher capital expenditures throughout the company’s fiscal 2025 to alleviate these constraints. The company expects growth to reaccelerate in the back half of fiscal 2025 as more AI capacity comes online.

Cloud-based services have become the company’s largest revenue and earnings producer. The company’s Azure platform alone has the potential to grow to more than $200 billion in annual revenue over the next decade. Overall, we believe that the company will continue to deliver double-digit revenue and EPS growth and generate an enormous amount of free cash flow to return to shareholders and use for acquisitions.”