1. Microsoft Corp. (NASDAQ:MSFT)
Share Price as of October 18: $416.12
Surge in Share Price in 5 Years: 202.83%
Stock Split Confirmed: no
Number of Hedge Fund Holders: 279
Microsoft Corp. (NASDAQ:MSFT) is a technology company that develops, manufactures, and licenses software, hardware, and services. Founded in 1975, it became one of the most influential companies in the personal computer revolution with its Windows operating system. Today it offers a range of products and services, including the Windows operating system, Office productivity suite, Azure cloud computing platform, Xbox gaming consoles, and Surface devices.
Its stock has rallied after a recent decline, supported by a key technical level. Despite a general market downturn and concerns about Azure cloud computing revenue, the company’s focus on AI and its strong fundamentals position it for potential growth.
FQ4 2024 revenue increased 15.20% year-over-year, driven by strong growth in Microsoft Cloud, up 21% from a year-ago period. Individual Office sales grew 4%, while Dynamics ERP and CRM software sales increased 19%. Bing usage rose 3%. Azure revenue surged 30%, fueled by partnerships with Lumen Technologies and Palantir.
The company’s Copilot, an AI-powered productivity assistant, has seen significant growth, with Office 365 Copilot customer numbers increasing by over 60% sequentially in FQ4. With an Office 365 user base exceeding 400 million, Copilot’s future in productivity tools looks promising. Placing Platform Limited (PPL) has partnered with Microsoft to enhance its specialty insurance trading platform. This collaboration will leverage Microsoft’s data and AI capabilities to create a more efficient and data-driven platform.
In October, Lenfest Institute, OpenAI, and Microsoft Corp. (NASDAQ:MSFT) have launched a $10 million AI Collaborative and Fellowship program to support US metro news organizations in exploring and implementing AI technologies.
The company’s healthcare AI innovations offer a promising but risky investment opportunity. While the potential for high growth exists, the competitive and regulated market presents challenges. Continued investment in AI and cloud infrastructure positions the company as a market leader.
Generation Investment Management Global Equity Strategy stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q2 2024 investor letter:
“Generative AI’s hunger for power has increased disproportionately with its intelligence. According to one estimate, OpenAI’s GPT-4 required 50 gigawatt hours (GWh) of electricity to train, much more than the 1.3 GWh needed for GPT-3.3 And then AI requires even more power when it is put to use (so called ‘inference’). Some of the latest trends worry us. Microsoft Corporation (NASDAQ:MSFT) appears to be slipping in its ESG goals, with its greenhouse gas emissions rising again last year, as it invests in becoming a big player in AI. It is struggling in particular to curb its Scope 3 emissions in the capital goods category – nowhere more so than in the activity associated with the construction of data centres: both the embedded carbon in construction materials like steel and cement, as well as the emissions from the manufacturing of hardware components such as semiconductors, servers and racks. Google’s emissions have risen by close to 50% in the past five years.
We feel it is worth dwelling on Microsoft for a few moments, since we suspect you will be hearing a lot more about the relationship between AI and sustainability in the coming months. The bottom line is that we continue to see Microsoft as a sustainability leader. In the case of Scope 2 emissions, the company covers 100% of its electricity use with purchases of renewable energy. Crucially, though, the majority of this green energy is directly sourced via power purchase agreements, which bring new renewable capacity to the grid. Microsoft is also committed to operating 24/7 on renewable power by 2030, a policy that will help bring energy storage onto the grid as well…” (Click here to read the full text)
While we acknowledge the growth potential of Microsoft Corp. (NASDAQ:MSFT), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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