In this piece, we will take a look at the 10 best stocks for beginners with little money.
“In my view, for most people, the best thing to do is own the S&P 500 index fund,” believes Warren Buffett of Berkshire Hathaway, who is the most successful investor not only in our time but also in human history. Buffett made the remarks at his investment firm Berkshire Hathaway’s 2020 Annual Meeting, but it wasn’t the first time he shared similar thoughts. While most investment advisors and internet stock analysts are likely to boast about ‘chasing the alpha,’ for the Oracle of Omaha, who is currently worth $144.5 billion excluding his charitable donations over the years, most people are better off tracking the S&P.
Buffett has, in fact, held this opinion for years. Speaking to CNBC in 2017, he reiterated that “consistently” buying an index fund linked to the flagship S&P index is “the thing that makes the most sense practically all of the time.” Buffett added that an investor should persist even during the bad times, when the “temptation when you see bad headlines in newspapers is to say, well, maybe I should skip a year or something.” Do not give in, says the Oracle, and “just keep buying” since “American business is going to do fine over time, so you know the investment universe is going to do very well.”
Yet, there’s another temptation that especially beginners to the stock market have to face. This is the rush to ‘alpha’ and by extension, wealth and riches. But according to Buffett, the “trick is not to pick the right company, the trick is to essentially buy all the big companies through the S&P 500 and to do it consistently and to do it in a very, very low cost way,” since “you do not want to ever get the impression that you can pick stocks.” This false belief carries the risk of making a beginner believe that they have an edge over others, while the reality “just doesn’t work that way,” believes Buffett.
However, just because you’re a beginner with little money, doesn’t mean you can’t make it big. Wall Street, despite its flaws, has also produced titans of the investing world who started out with little to nothing. One of the best examples of this fact is Ken Fisher of Fisher Investments. Fisher’s childhood didn’t make him a stranger to Wall Street as his father Philip Fisher is one of the most consequential figures in Wall Street’s history. Fisher Sr. was the original Cathie Wood who popularized growth investing and sought to invest through a strategy called “scuttlebutt investing.”
Fisher Sr. covered this strategy in his seminal work Common Stocks and Uncommon Profits (“one of the great books on investing,” as per Buffett) and shared that an investor should conduct in depth research for a firm by getting to know its executives and employees. While Fisher’s father is a Wall Street legend, Ken started out his firm with just $250 in 1979. As of Q2 2024, the firm had $229 billion in investments as indicated through its SEC filings while Fisher’s net worth is $11.2 billion.
While today’s $250 is far from being similar in value to $250 when Fisher started his investing journey, technology enables today’s beginner investors to invest with even less money. One way to do so, if you’re feeling bold enough to ignore Buffett’s advice against stock picking, is to use fractional shares. Through these, a wide variety of brokerages enable beginners on the stock market to invest in stocks through as little as $1 and any dollar amount via features such as cash quantity stock orders. Fractional investing also enables some of the smallest investors to gain exposure to big ticket stocks, including Berkshire, whose Class B shares have a recent closing share price of $689,287.
Finally, before we get to our list of the best stocks to buy for beginners with little money, another way for a beginner to start out with little money and grow portfolio value over time comes through dividend stocks. These stocks offer beginner investors stable and often regular payouts over the long term. While everyone likes stable income, the true magic of these stocks is the ability to reinvest these dividends to generate even more returns. The benefits of reinvesting dividends are clear when we look at the data. This shows that a $1,000 investment in the benchmark S&P index would be worth $33,500 in 2022 without dividend reinvestment. But if the dividends were reinvestment, the final value nearly triple and would be worth $93,000.
With these details in mind, let’s take a look at some of the best stocks to buy for beginners with little money. If you want to learn about a special stock that might be able to deliver 100x returns, check out our report about the cheapest AI stock.
Pixabay/Public Domain
Our Methodology
To make our list of the best stocks to buy for beginners with little money, we first made a list of 20 stocks recommended by the financial media. Then, these were ranked by the number of hedge funds that had bought the shares in Q2 2024 and the stocks with the highest number of hedge fund investors were selected.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10. Comcast Corporation (NASDAQ:CMCSA)
Number of Hedge Fund Holders In Q2 2024: 61
Comcast Corporation (NASDAQ:CMCSA) is a well established broadband and broadcasting service in the US. Its size and scale, as evidenced by cash and equivalents of $6.2 billion and receivables of $13.8 billion, means that the firm enjoys low operating costs due to economies of scale and a large market presence to help it weather economic downturns or headwinds. However, Comcast Corporation (NASDAQ:CMCSA)’s industries, i.e. media and internet, are being disrupted by continued advances in connectivity and entertainment delivery. For instance, traditional television channels are being overtaken by online streaming services, while broadband internet is now a different market courtesy of SpaceX’s Starlink satellite internet service and fixed wireless providers. These technologies threaten to make the future quite difficult for Comcast Corporation (NASDAQ:CMCSA), and key to its survival will be the firm’s ability to retain its user base by leveraging its scale for exclusive broadcasting rights. Average revenue per user (ARPU), net subscriber growth, subscriber retention, and growth in streaming are some key drivers of Comcast Corporation (NASDAQ:CMCSA)’s hypothesis.
Comcast Corporation (NASDAQ:CMCSA)’s management shared details of one exclusive broadcasting deal during its Q2 2024 earnings call:
“Our expectation is that soon an 11-year rights deal between ourselves and the NBA will be announced. We don’t believe that the resolution of matching rights will affect the package that we expect to be awarded. This package, which begins with the 2025-2026 season includes: 100 NBA games each regular season across NBC and Peacock, which is more than any other media partner and more regular season games than each existing partner has under the current rights deal; for playoffs, we will have first and second round games each year, exclusively on our national platforms and six NBA conference final series over the course of the term of the deal, which is more playoff games on average each year, than any other media partner; and exclusively for Peacock will be approximately 50 national regular season and post-season games, including National Monday Night games and doubleheaders.
Additional elements of the NBA package include the annual NBA All-Star Game and All-Star Saturday Night each season, the season opening NBA tip-off doubleheader each season, a special doubleheader on the MLK holiday, and Select NBA games in every NBA All-Star game on Telemundo. Beyond the NBA itself, we’re excited that our package includes WNBA, where starting in the spring of 2026, we’ll have more than 50 WNBA regular season and first round playoff games each season across Peacock, NBC and USA, and we’ll also have games in seven WNBA Conference semifinals and three WNBA Final series; for USA Basketball, we’ll have the rights to USA men’s and women’s games leading up to the Olympics and FIBA World Cup; Sky Sports will air all of NBCUniversal’s NBA and WNBA games in its markets; and finally, Xfinity will be the NBA and WNBA’s marketing partner in the video category.”
9. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders In Q2 2024: 65
PepsiCo, Inc. (NASDAQ:PEP) is a global brand name for carbonated beverages. Its strong brand recognition, considerable financial resources (cash equivalents of $10 billion), and global presence as evidenced by nearly 300,000 employees worldwide mean that PepsiCo, Inc. (NASDAQ:PEP) enjoys considerable economies of scale. This is key in the beverages industry, as along with innovative product ideas, volume shipped is a central tenet of any firm’s hypothesis. However, at the same time, the economies of scale also mean that PepsiCo, Inc. (NASDAQ:PEP) has to keep a tight grip on its costs since it is a key metric that investors watch. Any weakness on this part can translate into share price headwinds, and PepsiCo, Inc. (NASDAQ:PEP) has benefited from recent inflationary trends by raising prices that have allowed it to post a 30% absolute revenue growth between 2020 and 2023. Yet, the firm’s direct sales costs have grown by 32% while its operating costs have jumped by 28.5% making PepsiCo, Inc. (NASDAQ:PEP) walk a tightrope when it comes to margins. This rope might become thinner in the future as slowing inflation and sticky costs continue to pressure the firm’s margins.
Artisan Partners mentioned PepsiCo, Inc. (NASDAQ:PEP) in its Q1 2024 investor letter. Here is what the fund said:
“In the demographics/consumer trends theme, slowing sales volumes led us to focus more on services versus goods. As an example, we sold our position in food and beverage leader PepsiCo given slowing growth in its underperforming core beverage business, one which generates about 60% of revenues. Adding to the uncertainty of growth prospects beverages, PepsiCo was forced by local lawmakers and industry wholesalers to shift to a new distribution model during the rollout of Hard Mtn Dew, a new line of drinks that combines Mountain Dew with malt liquor.”
8. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders In Q2 2024: 71
AT&T Inc. (NYSE:T) is one of the three largest telecommunications services providers in America. It is also one of the oldest telecommunications companies in the US and was set up as American Telephone and Telegraph Compay (AT&T) in the late 1800s. This creates a double edged sword for AT&T Inc. (NYSE:T), just like it does for Comcast. For starters, it has allowed the firm to be a stable dividend paying stock. The firm’s sizeable trailing twelve month net income of $12.5 billion allows it to reward investors through dividends. AT&T Inc. (NYSE:T)’s dividend yield is 5.29%, and it was a dividend aristocrat until 2021 after which it had to cut dividends due to spinning off the Time Warner division. Yet, AT&T Inc. (NYSE:T)’s history also means that the firm has had to deal with the ghosts of its past. Its shares tanked by 12% in 2023, for their lowest value since 1993 after a WSJ report revealed that AT&T Inc. (NYSE:T) left toxic lead cables buried underground. While the firm has tried to assuage investor worries, it could see significant headwinds in the future if growing US government pressure forces it to make amends. Additionally, AT&T Inc. (NYSE:T) has to ensure that it leads in fiber deployments and wireless postpaid subscribers, as a shifting internet industry impacts the telecommunications sector.
AT&T Inc. (NYSE:T)’s management commented on these key business areas during the Q2 2024 earnings call:
“The durable trends in 5G and fiber are being driven by more than the solid individual execution within each business. We believe the success of our fiber business is driving growth in mobility and vice-versa as consumers increasingly prefer to purchase mobility and broadband together as a converged service. For example, today, nearly four out of every 10 AT&T Fiber households also choose AT&T as their wireless provider. As a result, our share of postpaid phone subscribers within the AT&T Fiber footprint is about 500 basis points higher than our national average. In our fiber business, we continue to achieve key penetration milestones faster than we anticipated and considerably faster than the fiber providers that do not operate wireless networks based on publicly available data.
A key reason for the strong performance is our ability to sell fiber to our mobile customers. Additionally, we’re able to reach new broadband customers through our substantial mobile distribution channels. The key point here is that our proven ability to drive higher share in both mobility and broadband through converged service penetration is the true benefit of owning and operating both 5G and fiber networks at scale. Over time, we expect this to drive greater returns on invested capital in both our mobility and broadband businesses than either would be expected to achieve as standalone operations. While our convergent strategy began with a focus on our owned fiber footprint, we also see attractive opportunities to expand the availability of AT&T Fiber, and our converged offers outside of it.”
7. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders In Q2 2024: 80
Johnson & Johnson (NYSE:JNJ) has been in the business of healthcare and personal well being for more than a century now. This has enabled it to establish global dominance by being the biggest pharma company in the world by revenue. Johnson & Johnson (NYSE:JNJ)’s trailing twelve month revenue as of Q2 2024 is $86.5 billion, and its heft is also evident through cash and equivalents of $21.8 billion. However, the pharmaceutical industry is one of the riskiest in the world because of health risks, and in the case of Johnson & Johnson (NYSE:JNJ), this fact has meant that the shares are up by a modest 2.76% year to date. The share price has been depressed because of the firm’s cancerous talcum powder which has seen it agree to pay $700 million in settlements. The stock has seen some headwinds clear up since August after Johnson & Johnson (NYSE:JNJ) made progress in making a subsidiary declare bankruptcy to deal with a stunning $6.4 billion in lawsuits. In September, the stock dropped by 1.78% after a media report claimed that Johnson & Johnson (NYSE:JNJ) had added $1.1 billion to its settlement which should led to payouts exceeding $9 billion paid over 25 years.
However, as it fights legal battles, Johnson & Johnson (NYSE:JNJ) is also focusing on its medical devices segment where it benefits from its considerable financial resources to fund development. During the Q2 2024 earnings call, management shared:
“Turning to MedTech, we continue to advance our pipeline, launch new commercial products and integrate strategic acquisitions that broaden and further differentiate our portfolio. In cardiovascular, we are enhancing our portfolio and shifting into higher growth markets through strategic acquisitions such as Shockwave Medical. In May, we announced the launch of our CARTO 3 Version 8 electroanatomical mapping system. This is the latest version of our 3D heart mapping system, which has machine learning capabilities that increase efficiency, reproducibility, and accuracy in maps electrophysiologists use to treat atrial fibrillation and other arrhythmias. In pulsed field ablation, we initiated the commercial launch of the VARIPULSE platform in the EU and Japan receiving early positive physician feedback in the external evaluation period.
We also delivered results from the pivotal phase of the admIRE trial, where the VARIPULSE platform demonstrated 85% peak primary effectiveness with minimal adverse events, short PFA application times and low fluoroscopy exposure. In orthopedics, we received 510(k) FDA clearance for the clinical application of the VELYS Robotic-Assisted Solution in unicompartmental knee arthroplasty. This is designed for both medial and lateral procedures enabling surgeons to guide precise implant placement without a CT scan. In surgery, we launched the ECHELON 3000 in the U.S., which combines 3D stapling and gripping surface technology to enable greater staple line security. This has been shown to deliver 47% fewer leaks, reduce surgical risks and improve surgical outcomes.”
6. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders In Q2 2024: 96
Walmart Inc. (NYSE:WMT) is the undisputed global champion of brick and mortar retail through its 100,000+ locations worldwide. It’s been in the grocery retail business since 1962, which has enabled Walmart Inc. (NYSE:WMT) to establish its dominant foothold and become a company with $252 billion in assets and $665 billion in revenue. The firm’s operating footprint and asset base mean that apart from a black swan event, Walmart Inc. (NYSE:WMT) is unlikely to recede its presence in the market. However, the heft, which lends it considerable economies of scale and allows it to dominate the market via low prices also means that Walmart Inc. (NYSE:WMT) has to be on the lookout for competitors in emerging and high growth industries such as eCommerce. Subsequently, the keys to its hypothesis are traditional same store sales, and the performance of its digital initiatives such as the Walmart Marketplace and associated high margin revenue streams of seller fees and digital advertising. IF Walmart Inc. (NYSE:WMT) delivers in the latter areas, its shares could see significant headwinds and it might very well do so due to its strong logistics footprint that is indispensable for any eCommerce company.
Walmart Inc. (NYSE:WMT)’s management commented on the new age businesses during its Q2 2024 earnings call:
“For marketplace and Walmart fulfillment services, in the U.S., we’ve now seen more than 30% growth in each of the past four quarters, as we continued to increase seller counts on the platform by double-digits. Growth from sellers using our Marketplace Fulfillment Services increased 800 basis points in Q2, surpassing 40% penetration. Sales in fashion, toys, hard lines, and home all grew more than 20%. Outside the U.S., we’re seeing similar trends as we enhance our capabilities in product assortment. For example, Flipkart delivered double-digit top line growth and more than doubled the number of units that delivered same day. In Mexico, we grew marketplace items and sellers by around 60%.
And in Chile, we launched cross-border trade, adding sellers from China and the U.S. to our local marketplace offering. Within data analytics and insights, Walmart Data Ventures continues to see strong results as clients value the insights we provide, bringing together consumer behavior with omnichannel sales and inventory trends across our platform. Our client base has increased nearly 200% versus last year as we launch new tools and enter new markets, including the expansion of our Walmart Luminate product in Mexico in May.”
5. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders In Q2 2024: 111
JPMorgan Chase & Co. (NYSE:JPM) is the world’s biggest private bank in terms of total assets. As opposed to regional US banks, it benefits not only from a global consumer and corporate banking presence but also from a presence in the lucrative investment and capital markets. This allows JPMorgan Chase & Co. (NYSE:JPM) to diversify its business and ensure that it stays on top in varying economic climates. For instance, between 2021 and 2023, when interest rates soared, JPMorgan Chase & Co. (NYSE:JPM)’s revenue has grown its revenue from an already sizeable $122 billion to $155 billion or by 27%. This shows strong management execution as mega firms are unable to post mid double digit percentage revenue growth. From 2021 end to 2023 close, JPMorgan Chase & Co. (NYSE:JPM)’s stock has 7.4% while the shares are up by 23% year to date. The latter gain reflects investor hopes for an interest rate reduction cycle that can stimulate capital markets and provide sizeable catalysts for JPMorgan Chase & Co. (NYSE:JPM). However, if markets perceive that a recession is on the horizon, then the stock could suffer as investors price in the potential for higher loan losses.
Vitava Fund mentioned JPMorgan Chase & Co. (NYSE:JPM) in its Q4 2023 investor letter. Here is what the fund said:
“Last spring, the US went through a brief banking crisis that cost several smaller and medium-sized banks their lives. One of them, First Republic Bank, with assets of $230 billion, went into receivership and was bought out by the largest US bank, JP Morgan. The acquisition terms were very favourable for JPM and the facts that few, if any, other banks could have taken over the whole of First Republic Bank in its then-present state while guaranteeing more than $100 billion of its deposits played a role. JPM could do it. It is not only the largest, but also by its balance sheet the strongest US bank and, in our opinion, clearly the best managed. It has come out of this crisis even stronger. We have actively followed the banking sector for 20 years in many countries around the world. Our view is that a well-managed bank can be a very good long-term investment but that it is better to focus on the best and highest quality available. Banking is not a sector where it pays to trade quality for cheaper valuations. That is why we hold JPM.”
4. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders In Q2 2024: 114
UnitedHealth Group Incorporated (NYSE:UNH) is the largest healthcare benefits provider in America as it serves the needs of more than 50 million people. This allows the firm to rely on a sizeable customer base to continue using its products regardless of macroeconomic conditions. Additionally, UnitedHealth Group Incorporated (NYSE:UNH)’s size also means that it can gain an early mover advantage through low costs and a large network of healthcare providers for the markets of new drugs such as GLP-1 weight loss treatments. This is key for UnitedHealth Group Incorporated (NYSE:UNH), and benefits can expand to other drugs such as gene editing treatments for hereditary diseases or revolutionary new cancer treatments. Additionally, UnitedHealth Group Incorporated (NYSE:UNH) also has a sizeable presence in the healthcare services and data analytics industry through its Optum business division, which serves 104 million customers.
UnitedHealth Group Incorporated (NYSE:UNH)’s management believes that the firm can maintain its sizeable customer base in 2025 and beyond. Here’s what they said during the Q2 2025 earnings call:
“We’re also well positioned for growth in 2025. In the selling season to date, the most sophisticated thoughtful buyers of health benefits and services in the US, such as large employers, unions, states, seniors, all continue to choose the offerings of UnitedHealth Group, when they’re looking for managed care, pharmacy services or a Medicare Advantage plan that provides the best value. This consistent growth reflects customers’ recognition of the need for a company like ours. As you know, UnitedHealth Group strives to help reduce the fragmentation and lack of coordination that drives up costs and erodes care outcomes in the $5 trillion US healthcare marketplace. We aim to better coordinate and align incentives among caregivers, payers, and pharmacy, enabling us to focus on the whole patient throughout their health journey.
We believe this increases value for customers and consumers, improves people’s experience and health, reduces redundancies and waste, and ultimately leads to a more sustainable health system. For example, the proven health and economic value to consumers and taxpayers of Medicare Advantage. A recent study by Milliman found that the cost of taxpayers of Medicare Advantage is 4% less than traditional fee-for-service Medicare. At the same time, Medicare Advantage provides seniors well over $2,000 per year in additional value through lower out-of-pocket cost and important services like dental, vision and hearing, none of which fee-for-service Medicare covers. That means a lot to the majority of the people Medicare Advantage serves, who have limited economic resources and otherwise would lack access to such services.”
3. Berkshire Hathaway Inc. (NYSE:BRK-B)
Number of Hedge Fund Holders In Q2 2024: 120
Berkshire Hathaway Inc. (NYSE:BRK-B) is Warren Buffett’s investment holding company. Not only does it invest in stocks and hold on to them for dear life most of the time, but it also has a sizeable presence in the insurance industry. During the second quarter, $26 billion of Berkshire Hathaway Inc. (NYSE:BRK-B)’s revenue came from insurance. It has a presence in both homeowners and auto insurance industry, with the latter being the larger business. For insurance specifically, Berkshire Hathaway Inc. (NYSE:BRK-B) benefits from cross selling home policies to its auto consumers. The firm is also well diversified, and it has a sizeable presence in cyclical and counter cyclical industries such as energy, green energy, construction, railroads, and aviation services. Finally, its fortress of a balance sheet sees Berkshire Hathaway Inc. (NYSE:BRK-B) hold an unbelievable $234 billion in short term investments, which provides it with more liquidity than most banks in the world for a well rounded business model.
The London Company mentioned Berkshire Hathaway Inc. (NYSE:BRK-B) in its Q1 2024 investor letter. Here is what the fund said:
“Insurance was once again a bright spot in Berkshire Hathaway Inc. (BRK.B)’s 4Q earnings; GEICO showed meaningful margin improvement. The company once again sold some securities in the quarter, resulting in near all-time highs in the balance of cash & short-term investments. Overall, we continue to appreciate BRK.B for their financial strength, investment acumen, and disciplined management.”
2. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders In Q2 2024: 130
Broadcom Inc. (NASDAQ:AVGO) is one of the most diversified technology companies in the world. It has direct exposure to the massive consumer electronics market through its modems, radios, and other products that are used in smartphones. Additionally, 44% of Broadcom Inc. (NASDAQ:AVGO)’s Q3 2024 revenue, or $5.7 billion out of $13 billion came from its software business that primarily sells cybersecurity through a SaaS business model to enterprise customers. SaaS is a growth focused and recurring revenue industry with low margins, and it helps Broadcom Inc. (NASDAQ:AVGO) to ensure predictable future revenues and exposure to high growth industries such as artificial intelligence. High growth was the theme for the firm’s software business in Q3, as revenue grew by 200% as it reaped the benefits from its VMware acquisition. Additionally, Broadcom Inc. (NASDAQ:AVGO)s sizeable chip design experience could create more tailwinds if it can win AI computing chip design orders, especially since rumors believe that OpenAI is working with it to develop alternatives to NVIDIA products. Yet, these tailwinds can evaporate just as soon as they materialize, as was evident in September when shares tanked by 10% after its $1 billion AI sales guidance boost did not beat market estimates.
Broadcom Inc. (NASDAQ:AVGO)’s management shared key details for this guidance during the Q3 2024 earnings call:
“Well, our number in third quarter is pretty much in line what we expect AI revenue to be. And our revenue in Q4 was — forecast for Q4 is what’s giving us the basis to a large extent to step up our guidance for AI revenue for the full year to over $12 billion. So if nothing else, that continues to indicate, I hope to us, that next year the trend will continue to be strong. And again, it’s all largely hyperscalers, cloud, and digital natives. And it’s again, a mix of AI accelerators and networking. And it’s also largely based on backlog we have in place for that. Beyond that — and it shows the growth. Beyond that, no, we’re not guiding you beyond the backlog we have. So I kind of answer your question indirectly on, do I have any more customers? We shall see.”
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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