10 Best Stocks to Buy According to Billionaire D.E. Shaw

3. Microsoft Corporation (NASDAQ:MSFT)

D.E. Shaw & Co’s Stake Value: $1.71 Billion

Number of Hedge Fund Holders: 279

Microsoft Corporation (NASDAQ:MSFT) is a technology giant that develops and supports software, services and solutions. It is one of the best stocks to buy, according to billionaire D.E. Shaw, amid the artificial intelligence race. The company has been investing in generative AI to strengthen its software offerings, cloud unit, and search engine.

Likewise, the company has cemented its position as the second-largest cloud computing company with a 25% market share. While Microsoft Corporation (NASDAQ:MSFT) does not release revenue numbers for its Azure platform, revenue for Azure and other cloud services was up by 33% in its fiscal fourth quarter. The company spent $55.7 billion in its fiscal 2024. A majority of the investment went to building the AI infrastructure, which is expected to be a key growth driver.

In fiscal Q4, Microsoft Corporation (NASDAQ:MSFT) notes that the number of paid customers doubled from quarter to quarter, demonstrating the impressive traction of its models-as-a-service offering. Customers can rent a variety of models from the tech giant to help them create and implement AI applications. Therefore, Microsoft should see further acceleration in its Azure revenue as the demand for AI services in the cloud is expected to grow significantly in the upcoming years.

Growing demand for Microsoft 365 office collaboration and productivity tools, cloud computing solutions and a 9% increase in search and news-advertising revenue affirm the tech giant is well poised for long-term growth.

RiverPark Large Growth Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q3 2024 investor letter:

“Microsoft Corporation (NASDAQ:MSFT): MSFT was a top detractor in the third quarter following a fiscal fourth quarter earnings report that featured inline operating metrics but mixed guidance. Positively, the company reported strong revenue (+15%) and earnings growth (+10%), powered by Azure (+30%), and operating margins of 43%. Guidance however calls for lower than expected fiscal first quarter Azure revenue as infrastructure constraints limit growth, and higher capital expenditures throughout the company’s fiscal 2025 to alleviate these constraints. The company expects growth to reaccelerate in the back half of fiscal 2025 as more AI capacity comes online.

Cloud-based services have become the company’s largest revenue and earnings producer. The company’s Azure platform alone has the potential to grow to more than $200 billion in annual revenue over the next decade. Overall, we believe that the company will continue to deliver double-digit revenue and EPS growth and generate an enormous amount of free cash flow to return to shareholders and use for acquisitions.”