1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) empowers people and organizations to achieve more with technology. It has segments namely Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The company is best known for its software products but it has a solid presence in other emerging domains.
Microsoft was one of the first in the metaverse race with its HoloLens mixed reality headset. While the firm is no longer producing its HoloLens 2 headset, it still remains in the race. Microsoft decided to make a metaverse inside Teams through Microsoft Mesh which powers 3D immersive experiences using next-generation technology that makes virtual connections seem like face-to-face interactions.
While Mesh was available on PC and Meta Quest VR devices, it was announced to be generally available in Microsoft Teams in January 2024. Previously, the Mesh avatars opened the doors of workplace metaverse in Teams. Customers including Accenture, BP, and Mercy Ships are reaping the benefits of Mesh already. Additionally, Microsoft acquired Activision Blizzard, a leader in game development and interactive entertainment content publisher. This move was seen by the company as a step towards growth in its gaming business across mobile, PC, console, and cloud while providing building blocks for the metaverse.
For the FY25 Q1, Microsoft Corporation (NASDAQ:MSFT) recorded revenue of $65.6 billion, up 16% year-over-year. The firm witnessed a solid start to its fiscal year, driven by the continued strength of the Microsoft Cloud, which surpassed $38.9 billion in revenue. Revenue in Productivity and Business Processes was up 12%, revenue in Intelligent Cloud increased 20%, and revenue in More Personal Computing rose 17%, year-over-year. Simultaneously, the firm’s AI business is on track to surpass an annual revenue run rate of $10 billion next quarter.
While the hardware aspect of Microsoft’s presence in the metaverse might fade with the discontinuation of HoloLens 2, its expertise in gaming and the cloud is proven and is expected to foster the firm’s foothold in the metaverse. Microsoft Corporation (NASDAQ:MSFT) ranks among the 10 best metaverse stocks to buy according to hedge funds. The stock is held by 279 hedge funds, as of 2024’s second quarter.
While we acknowledge the potential of MSFT as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
