2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Recently, Microsoft Corporation (NASDAQ:MSFT) partnered with Accenture and Avanade to help businesses transform their functions using artificial intelligence and Microsoft Copilot. In addition to that, the company also launched new and improved adapted AI models for various industries, addressing the particular AI needs of organizations.
Speaking of MSFT’s position on AI, on November 19, the company reported on the global impact of its artificial intelligence applications. According to the report, more than 85% of the companies in the Fortune 500 are now using Microsoft AI and almost 70% are using Microsoft 365 Copilot. Overall, the company saw widespread adoption of its AI tools and products by prominent names across the globe. These partnerships and advancements helped Microsoft Corporation (NASDAQ:MSFT) report solid financial results, giving it a strong head start to the fiscal year 2025.
Microsoft Corporation (NASDAQ:MSFT) is showing solid performance in the AI domain. On October 31, RBC Capital Markets software equity analyst, Rishi Jaluria, appeared on Yahoo Finance to discuss the competitive position of MSFT in the AI sector. Jularia suggested that while the overall business is accelerating, Azure AI has been performing exceptionally, which in his opinion is very encouraging. He also added that despite the hefty capital expenditure, MSFT is in an “enviable” competitive position.
Baron Opportunity Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q3 2024 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) is the world’s largest software and cloud computing company. Microsoft was traditionally known for its Windows and Office products, but over the last five years it has built a $147 billion run-rate cloud business, including its Azure cloud infrastructure service and its Office 365 and Dynamics 365 cloud-delivered applications. Shares gave back some gains from strong performance over the first half of this year. For the fourth quarter of fiscal year 2024, Microsoft reported a strong quarter with total revenue growing 16%, in line with the Street; Microsoft Cloud up 22%; Azure up 30%; 43% operating income margins; and 36% free cash flow margins. Core Azure growth came in one point shy of expectations, however, due to a soft European market and continued constraints on AI compute capacity. In the same vein, while Microsoft reiterated its fiscal 2025 targets of double-digit top-line and operating income growth, quarterly guidance called for Azure growth to slow a bit before accelerating in the back half of the fiscal year, as capital expenditures increase, yielding an expansion of AI compute capacity. We believe this investment is a leading indicator for growth, with more than half of the spend related to durable land and data center build outs, which should monetize over the next 15-plus years. We remain confident that Microsoft is one of the best-positioned companies across the overlapping software, cloud computing, and AI landscapes, and we remain investors.”
