10 Stocks on Analysts’ Radar Amid Tariff Turbulence

2. Microsoft Corp (NASDAQ:MSFT)

Number of Hedge Fund Investors: 317

Dan Niles, Niles Investment Management founder, reiterated in a latest program on CNBC that AI capex is slowing down. Niles gave the example of Microsoft Corp (NASDAQ:MSFT) to prove his point:

“If you look at Microsoft, for example, which is the biggest capex spender out there, they’re going to spend over $80 billion this year. People look at that and they go, wow, fiscal year 25 capex this year is going to be up over 50% from Microsoft, and you get all excited and go, wow, it just shows capex demand is strong.

If you look at it on a sequential basis—because remember, Microsoft’s fiscal year ends in June—on a sequential basis, capex was growing about 16% on average each quarter of last year. They have guided to flat sequential growth for the next two quarters.

And so that’s why, and you can see that in a lot of the companies, whether it’s Amazon or the other big names out there. It’s just looking at the math, not me, and you go, well, that’s slowing down.”

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.”