10 Stocks That Will Benefit From AI

2. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders In Q3 2024: 279

Microsoft Corporation (NASDAQ:MSFT) is the mega technology firm that is known for its Windows operating system and Azure cloud computing platform. It is also one of the most important players in the artificial intelligence industry owing to its investment in OpenAI. OpenAI is widely heralded as an AI software industry leader, but for Microsoft Corporation (NASDAQ:MSFT), the firm’s narrative depends on its ability to monetize its AI investments by generating profit. In focus is its Azure business through which it has to push AI services to businesses and earn enough profit to satiate investors who are already wary about the billions that it has invested in AI. Since their peak in July, Microsoft Corporation (NASDAQ:MSFT)’s shares have lost 6.5% as Wall Street cautiously evaluates the business case for its AI products and services.

Mar Vista Investment Partners mentioned Microsoft Corporation (NASDAQ:MSFT) in its Q3 2024 investor letter. Here is what the fund said:

“Microsoft Corporation (NASDAQ:MSFT) stock was pressured in the quarter as investors fretted over rising capex as Microsoft invests heavily in the burgeoning generative AI market. Investors are concerned about the rising capital intensity of the business and the uncertain return on that investment. We continue to believe that Microsoft occupies a strong competitive and strategic position and that it is poised to capture market share as businesses, both large and small, navigate the transition to a digital-first landscape and embrace generative AI-driven productivity tools. 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 adoption of cutting-edge, AI-driven solutions, such as ChatGPT and its suite of Copilot applications, which enhance productivity and reduce 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.”