10 Best ESG Stocks To Buy Now

2. Microsoft Corporation (NASDAQ:MSFT)

Percentage of holdings in the fund: 6.79%

Number of Hedge Fund Holders: 279

Microsoft Corporation (NASDAQ:MSFT) stands out as a leading ESG stock, much in part due to its strategic investment in OpenAI, the creator of ChatGPT, which has strengthened its position across hardware, software, and global cloud services. The company is committed to sourcing 100% renewable energy by 2025, becoming carbon negative by 2030, and offsetting all historical carbon emissions since its founding in 1975 by 2050.

Microsoft Corporation (NASDAQ:MSFT) shares recently dipped after the company’s latest quarterly results revealed slower-than-expected growth in its Cloud business. For the current quarter, Microsoft Corporation (NASDAQ:MSFT) projects revenue between $63.8 billion and $64.8 billion, slightly below the $65.07 billion estimate, with Azure revenue anticipated to grow by 28% to 29% year over year. Additionally, the company’s Office commercial customer sales surged to $48 billion, marking a significant increase from last year’s 10% growth, likely fueled by the adoption of Copilot Pro subscriptions.

BMO Capital Markets maintained its positive outlook on Microsoft Corporation (NASDAQ:MSFT), keeping an Outperform rating and a $500 price target. The firm emphasized Microsoft Corporation (NASDAQ:MSFT)’s strong position in artificial intelligence and its diverse product portfolio as key reasons for its top pick status. Although BMO acknowledged a less-than-stellar June quarter report and guidance for about 29% year-over-year growth in Azure for the September quarter, Microsoft’s management projected an acceleration in Azure growth in the second half of fiscal 2025 during the last earnings call. BMO’s analysis suggests that while Azure’s growth has been limited by capacity constraints in recent quarters, these challenges are expected to ease in the latter half of FY25, supported by a strong demand pipeline.

Polen Focus Growth Strategy stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q2 2024 investor letter:

“The top absolute contributors were Alphabet, Microsoft Corporation (NASDAQ:MSFT), and Amazon. Microsoft was another top absolute contributor in the quarter, speaking to a growing appreciation for all the ways the company has an opportunity to monetize GenAI, be it in its Office suite or Azure cloud business. In the latter case, it contributed 7% to Azure’s revenue growth in the most recent quarter. We believe Microsoft remains a highly advantaged business with many secular tailwinds driving durable growth for the foreseeable future, even at its immense scale.”