1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders In Q2 2024: 279
Microsoft Corporation (NASDAQ:MSFT) is one of the biggest technology companies in the world and a leader in the enterprise computing space. It has exposure to the voluminous personal computing industry via the Windows platform and enterprise computing through Azure. A software focused business model has also allowed Microsoft Corporation (NASDAQ:MSFT) to become one of the top global players in artificial intelligence. So much so that since the public reveal of ChatGPT in November 2022, Microsoft Corporation (NASDAQ:MSFT), which has invested billions into OpenAI, has seen its stock soar by 83% to its peak in July 2024. However, since AI, and particularly the ability to profit from it through enterprise sales, is now baked into Microsoft Corporation (NASDAQ:MSFT) stock, any weakness in lower market AI adoption or AI monetization will not bode well for the shares. This has been the case since July, as Microsoft Corporation (NASDAQ:MSFT)’s shares are down by 14% as the market waits to decide on the macroeconomic outlook and the potential for further AI growth.
Baron Funds mentioned Microsoft Corporation (NASDAQ:MSFT) in its Q2 2024 investor letter. Here is what the firm said:
“Microsoft Corporation is the world’s largest software and cloud computing company. Microsoft was traditionally known for its Windows and Oice products, but over the last five years it has built a $135 billion run-rate cloud business, including its Azure cloud infrastructure service and its Oice 365 and Dynamics 365 cloud-delivered applications. The stock contributed to performance because of continued strong operating results and investor enthusiasm regarding Microsoft’s leadership across the secular megatrends of AI and cloud computing. Recent business momentum continued to show evidence of the strength and attractiveness of Microsoft’s product portfolio among its customer set: (1) Azure OpenAI – its suite of AI services – is now used by 65% of the Fortune 100 and contributed 7% of Azure revenue (an annualized run rate of $5.2 billion); (2) GitHub Copilot – its AI code writing service – is bending the productivity curve for developers (reports of 40%- plus improvements in developer efficiency) and now has 1.8 million paid subscribers, with growth accelerating to over 35% quarter-over-quarter; and (3) Copilot Studio – its AI application service that makes it easier for anyone to build an application, automate a workflow, or create a Copilot using natural language. 30,000 organizations across every industry have used Copilot Studio to customize Copilot for Microsoft 365 or build their own, up 175% quarter-over- quarter. In the March quarter, Microsoft again reported better-than-expected financial results, highlighted by Microsoft Cloud growing 23% year- over-year, with the fastest commercial bookings in six quarters, and Azure accelerating to 31% constant currency growth, up from 28% in the previous quarter. June quarter guidance came in-line with consensus, but the company provided higher guidance for the most important segment, Intelligent Cloud, on the back of continued strong trends across Azure and Azure OpenAI. We remain confident that Microsoft is one of the best- positioned companies across the overlapping software, cloud computing, and AI landscapes.”
MSFT tops our list of the top stocks for beginners on a budget. But our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an 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.
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