2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) started as a Windows operating system, after 40 years it is renowned for its cloud computing, Office productivity suite, gaming, advertisement, and taking significant leaps in artificial intelligence.
It is one of the best technology stocks and was held by 279 hedge funds in Q2 2024, with total stakes worth $89.07 billion. Bill & Melinda Gates Foundation Trust is the top shareholder of the company with a position worth $15.59 billion.
The fiscal Q4 2024 was a success for Microsoft Corporation (NASDAQ:MSFT). The company grew its revenue by 15% to reach $64.7 billion. Revenue growth was boosted by exceptional performance across the board. Azure and other cloud service segments was the top contender with its segment revenues growing 30% during the year.
Robust revenue growth boosted the net income to $22.0 billion, increasing 10% year-over-year. Microsoft Corporation (NASDAQ:MSFT) leverages its strategic edge of being a highly profitable company. We have already seen how its revenues and net income increased across the board. In addition, the company also improved its operating income by 24% year-over-year to reach $109.4 billion again advocating its profitability. Microsoft Corporation (NASDAQ:MSFT) also pays a dividend to its investors. It has a payout ratio of 25.40% and a 5-year growth rate of 10%.
Should you invest in Microsoft Corporation (NASDAQ:MSFT)?
We have already seen how the company posted impressive growth figures during its recent quarter. To get a long-term perspective, if you look at the past 10-year performance the company has grown its revenue by 11%, net income by 15%, and levered free cash flow by 9%. This topped with its quarterly results makes MSFT an attractive investment opportunity for growth investors.
Baron Opportunity Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q2 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 $135 billion run-rate cloud business, including its Azure cloud infrastructure service and its Office 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.”
