10 Best Cloud Computing Stocks to Buy Now

2. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 293

Microsoft Corporation (NASDAQ:MSFT), another major player in the tech industry, focuses on systems software. The company’s Intelligent Cloud segment is responsible for providing its cloud computing offerings, including the well-known platform Microsoft Azure. Microsoft Corporation (NASDAQ:MSFT) ranks highly among the best cloud computing stocks to buy now.

Microsoft Corporation’s (NASDAQ:MSFT) earnings report revealed a 13% year-over-year increase in revenue, reaching $6.4 billion. This growth stemmed from two key segments: Intelligent Cloud and Productivity and Business Processes. Furthermore, Microsoft Corporation (NASDAQ:MSFT) reported an EPS of $2.94, higher than the estimated $2.84. The company has successfully beaten EPS estimates in the last 4 quarters.

Analysts are bullish on Microsoft Corporation (NASDAQ:MSFT), assigning a “Strong Buy” rating based on 35 analyst recommendations in the past 3 months. The average 12-month price target for Microsoft Corporation (NASDAQ:MSFT) sits at $500.71, suggesting a potential upside of over 10% from the current price levels.

Here’s what Baron Funds said about Microsoft Corporation (NASDAQ:MSFT) in its Q1 2024 investor letter:

“Our second largest purchase during the quarter was the software platform, Microsoft Corporation (NASDAQ:MSFT), which we continued to add to, after initiating a position in the fourth quarter of 2023. Microsoft continues to report strong quarterly results, with revenue growth of 16% year-over-year in constant currency thanks to better-than-expected demand in its intelligent cloud segment, which saw revenue growth of 19% year-over-year, driven by Azure growth of 28% with AI contributing 6pts to growth compared with 3pts in the prior quarter. While the adoption of GenAI remains in its early stages, Microsoft has disclosed positive initial data points with 53,000 Azure AI customers as of its December quarter up from 18,000 in the prior quarter, 1.3 million paid GitHub Copilot subscribers (up 30% sequentially) and more than 230,000 organizations who have used AI capabilities in the power platform (up 80% sequentially). Management also noted that large cloud optimizations that started a year or so ago have largely finished. Profitability also continues to be strong with 44% non-GAAP operating margins, which was 120bps better than expected.”