3. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Short % of Shares Outstanding: 0.74%
Microsoft Corporation (NASDAQ:MSFT) is one of the biggest technology companies in the world that develops productivity and business suite applications, cloud products, and personal computing products. It ranks third on our list of the best blue chip stocks according to short sellers.
The company’s chairman and CEO, Satya Nadella attributes Microsoft’s financial performance to its market-competitive platforms and cloud services. In the fiscal fourth quarter of 2024, Microsoft Corporation (NASDAQ:MSFT) reported revenue worth $64.7 billion, up by 15% year-over-year. During the same quarter, Microsoft Cloud, its most popular service, logged $36.8 billion in quarterly revenue, up by 21% year-over-year, and had record bookings.
The blue-chip stock is also a leader in artificial intelligence technology. Its AI-backed cloud service, Azure OpenAI service witnessed an increase in its customer base by 60%, reaching 60,000 clients in the second quarter of 2024. Microsoft’s investments in forging strategic alliances are worth mentioning. Previously, the company partnered with Lumen Technologies and Palantir to dominate the AI space and manage workloads on its proprietary cloud service, AWS.
Overall, Microsoft Corporation’s (NASDAQ:MSFT) financial strength coupled with its strategic partnerships explains why 279 hedge funds held positions in Microsoft (NASDAQ:MSFT) at the end of Q2 2024. Of those, the Bill & Melinda Gates Foundation Trust was the most dominant shareholder in the company.
Baron Opportunity Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q2 2024 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) is the world’s largest software and cloud computing company. Microsoft was traditionally known for its Windows and Office products, but over the last five years, it has built a $135 billion run-rate cloud business, including its Azure cloud infrastructure service and its Office 365 and Dynamics 365 cloud-delivered applications. The stock contributed to performance because of continued strong operating results and investor enthusiasm regarding Microsoft’s leadership across the secular megatrends of AI and cloud computing. Recent business momentum continued to show evidence of the strength and attractiveness of Microsoft’s product portfolio among its customer set: (1) Azure OpenAI – its suite of AI services – is now used by 65% of the Fortune 100 and contributed 7% of Azure revenue (an annualized run rate of $5.2 billion); (2) GitHub Copilot – its AI code writing service – is bending the productivity curve for developers (reports of 40%- plus improvements in developer efficiency) and now has 1.8 million paid subscribers, with growth accelerating to over 35% quarter-over-quarter; and (3) Copilot Studio – its AI application service that makes it easier for anyone to build an application, automate a workflow, or create a Copilot using natural language. 30,000 organizations across every industry have used Copilot Studio to customize Copilot for Microsoft 365 or build their own, up 175% quarter-over-quarter. In the March quarter, Microsoft again reported better-than-expected financial results, highlighted by Microsoft Cloud growing 23% year-over-year, with the fastest commercial bookings in six quarters, and Azure accelerating to 31% constant currency growth, up from 28% in the previous quarter. June quarter guidance came in-line with consensus, but the company provided higher guidance for the most important segment, Intelligent Cloud, on the back of continued strong trends across Azure and Azure OpenAI. We remain confident that Microsoft is one of the best-positioned companies across the overlapping software, cloud computing, and AI landscapes.”
