2. Microsoft Corp. (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corp. (NASDAQ:MSFT) is a technology giant that is well-known for its impactful technologies and has recently made significant strides in the AI landscape. In November, it launched new and improved AI models designed to cater to various industries, enhancing its offerings through the Azure AI model catalog.
Recent reports indicate that the company’s investments in AI are beginning to yield positive results. In FQ1 2025, which ended on September 30, the company reported $65.6 billion in revenue, reflecting a 16% increase year-over-year. This was driven by a record quarterly revenue of $38.9 billion from its cloud services, a 22% increase year-over-year. The Azure segment alone achieved a remarkable 33% growth in revenue, due to high demand for AI-driven solutions within its cloud offerings.
These developments highlight the effectiveness of its strategy in harnessing AI to boost business outcomes. The company revealed plans to build 3 trusted platforms focused on maximizing the benefits of AI for the business, demonstrating its approach to integrating AI into core business functions.
Microsoft Corp. (NASDAQ:MSFT) is at the forefront of AI innovation, with a clear focus on expanding its capabilities through partnerships and product enhancements. It is positioned to capitalize on the growing demand for AI solutions across various sectors, reinforcing its status as a leader in the technology industry.
Baron Opportunity Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q3 2024 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) is the world’s largest software and cloud computing company. Microsoft was traditionally known for its Windows and Office products, but over the last five years it has built a $147 billion run-rate cloud business, including its Azure cloud infrastructure service and its Office 365 and Dynamics 365 cloud-delivered applications. Shares gave back some gains from strong performance over the first half of this year. For the fourth quarter of fiscal year 2024, Microsoft reported a strong quarter with total revenue growing 16%, in line with the Street; Microsoft Cloud up 22%; Azure up 30%; 43% operating income margins; and 36% free cash flow margins. Core Azure growth came in one point shy of expectations, however, due to a soft European market and continued constraints on AI compute capacity. In the same vein, while Microsoft reiterated its fiscal 2025 targets of double-digit top-line and operating income growth, quarterly guidance called for Azure growth to slow a bit before accelerating in the back half of the fiscal year, as capital expenditures increase, yielding an expansion of AI compute capacity. We believe this investment is a leading indicator for growth, with more than half of the spend related to durable land and data center build outs, which should monetize over the next 15-plus years. We remain confident that Microsoft is one of the best-positioned companies across the overlapping software, cloud computing, and AI landscapes, and we remain investors.”
