10 Stocks Everyone’s Talking About as Trump Softens His Tone on China

2. Microsoft Corp (NASDAQ:MSFT)

Number of Hedge Funds Investors: 279

Malcolm Ethridge, managing partner at Capital Area Planning Group, said in a latest program on CNBC that he’s buying Microsoft Corp (NASDAQ:MSFT) because the company’s fundamental bull thesis is intact:

“I like to buy strong companies at moments of temporary weakness that don’t necessarily make any sense. Nothing fundamentally has changed about Microsoft. For those that didn’t really like the fact that their capex was 80 billion to 100 billion, well now you get to buy all the growth that that capex buys at a discount. Right, so you’re looking at something like 18 to 20% off between the two names. To Stephanie’s point, she led off with, I don’t have to buy the second or third best player in a sector anymore at these kinds of discounts. I can go buy the best name in the space, which is Microsoft or Amazon. And so that’s why I’ve been adding to those names in some of those MAG 7 names, especially the ones that aren’t negatively impacted by the consumer.”

Generation Global Equity Strategy stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q4 2024 investor letter:

“Microsoft Corporation (NASDAQ:MSFT), the world’s largest software company, has been in the portfolio for over a decade. We like the firm because its products align closely with society’s evolving needs. As the world digitises, demand for Microsoft’s tools will continue to grow. The company enjoys a wide economic moat – built on its unique market position, deep customer understanding and extensive global footprint.

Microsoft’s management team has a long-term vision. It makes bold investments in future growth, most recently in AI. We forecast that the IT intensity of the economy will double over the next 15 years. Microsoft is a rare company with USD 250 billion in revenues, projected to grow at 16% annually over the next five years.14 Earnings-per share could grow faster. Despite its near-term valuation appearing high, we believe Microsoft is well positioned to lead in the AI era, potentially doubling or tripling its market share. Additionally, we expect returns on capital (ROC) for its AI related investments to match historical levels, despite market scepticism.

There are risks. Demand for AI systems may not materialise as expected, and increasing pricing power among suppliers like Nvidia could pressure margins. Still, from our analysis we see substantial long-term value in this name.”