2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is an American multinational company headquartered in Redmond, Washington, which is best known for its software products and operating systems. It has nearly tripled its valuation over the last three years and reached the $3 trillion mark. It is the second most valuable corporation in the world.
According to Insider Monkey’s database, 279 hedge funds held stakes in the company as of the second quarter of 2024. Microsoft Corporation (NASDAQ:MSFT) continues to garner immense investor confidence through its strong financial performance. During Q4 2024, the company generated a revenue of $64.7 billion, which took the annual revenue to $245 billion, representing a 15% increase year-over-year. EPS for the quarter registered a 10% growth to reach $2.95 per share, beating analysts’ expectations of $2.94.
These robust results were largely driven by Microsoft Cloud, which contributed $135 billion of the company’s overall revenue in FY2024, up 23% YoY. The company’s commercial bookings also registered a 17% increase, driven by millions of dollars of contracts for both Microsoft 365 and Azure, indicating strong customer commitment. Microsoft Corporation (NASDAQ:MSFT) anticipates the trends to continue in FY25 and has projected double-digit growth for both revenue and operating income for the year.
Another reason behind investor confidence is the company’s increased spending on AI and cloud infrastructure. Microsoft spent $19 billion in capital expenditure in Q4 alone, and investors believe that this increased spending will help the company stay at par with, if not outperform, competitors in the market. Mar Vista Focus strategy stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q2 2024 investor letter:
Microsoft Corporation (NASDAQ:MSFT) continues to occupy a strong position, poised to capture market share as businesses, both large and small, navigate the transition to a digital-first landscape and embrace generative AI-driven solutions. The company’s commanding presence in the enterprise arena, combined with its comprehensive product portfolio encompassing Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS), establishes it as a crucial provider of IT solutions for companies of all scales. Microsoft is effectively executing its strategy in a sizable market by offering a roadmap for digital transformation and the adoption of innovative, AI-driven solutions, such as ChatGPT while enhancing productivity and reducing costs. Consequently, we anticipate that Microsoft’s solutions should exhibit resilience even in a more challenging macroeconomic environment, supporting low-double-digit growth in intrinsic value within our investment horizon.
There were some segments where revenue decreased. Xbox hardware sales declined 42% during the quarter and devices revenue also experienced an 11% dip. However, the company believes this was due to their focus being more on other premium products with a higher profit margin. On the whole, there is consensus among Street analysts about Microsoft being one of the best NASDAQ stocks to invest in right now. It has a Strong Buy rating and a 12.60% upward potential in share price.
