2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is an American technology company, best known for its operating systems and software products. It is the second most valuable company in the world after having tripled its valuation over the last three years to reach the $3 trillion mark.
The company continues to garner investors’ confidence through increased spending on artificial intelligence and cloud infrastructure. Microsoft spent $19 billion on capital expenditure during its fourth quarter of FY 2024, which ended in June. This was a 35% increase in spending from the March quarter. Here is what Mar Vista Focus stated regarding Microsoft Corporation (NASDAQ:MSFT) in its Q2 2024 investor letter:
Microsoft Corporation (NASDAQ:MSFT) continues to occupy a strong position, poised to capture market share as businesses, both large and small, navigate the transition to a digital-first landscape and embrace generative AI-driven solutions. The company’s commanding presence in the enterprise arena, combined with its comprehensive product portfolio encompassing Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS), establishes it as a crucial provider of IT solutions for companies of all scales. Microsoft is effectively executing its strategy in a sizable market by offering a roadmap for digital transformation and the adoption of innovative, AI-driven solutions, such as ChatGPT while enhancing productivity and reducing costs. Consequently, we anticipate that Microsoft’s solutions should exhibit resilience even in a more challenging macroeconomic environment, supporting low-double-digit growth in intrinsic value within our investment horizon.
The company also reported robust financial results during Q4 2024, with quarterly revenue recorded at $64.7 billion. This took the total annual revenue figure to $245 billion, representing a 15% increase from 2023. EPS for the quarter surged 10% year-over-year to reach $2.95 per share, beating analysts’ expectations of $2.94.
The strong performance was largely attributed to Microsoft Cloud, which generated $36.8 billion in quarterly revenue, and a 17% increase in commercial bookings, driven by millions of dollars of contracts for both Microsoft 365 and Azure. Heading into FY 2025, the company expects current encouraging trends to continue and has forecasted double-digit growth for both revenue and operating income for the year.
There were some segments where numbers declined for Microsoft during the quarter, such as Xbox hardware sales experiencing a 42% dip and devices revenue decreasing 11%. Despite that, the overall outlook for the company looks promising. Street analysts have consensus on the stock’s Strong Buy rating and anticipate a share price upside of 18% in the coming months.
Moreover, according to Insider Monkey’s database for Q2, 279 hedge funds had investments in the company, making it one of the most owned stocks by hedge funds right now.
