1. Microsoft Corp (NASDAQ:MSFT)
Number of Hedge Funds Holding Stakes as of Q2: 279
Market Cap as of September 18, 2024: $3.24 Trillion
Microsoft Corp. (NASDAQ:MSFT) is a tech powerhouse best known for providing some of the most sought-after software, including Windows and Office, among others. It’s also a big player in cloud computing, with Microsoft Azure, while flexing its muscles in the multi-billion gaming business through the Xbox product line.
The company has also poured billions into OpenAI, the creator of ChatGPT, and has integrated AI into numerous of its products. Its AI investments have once again strengthened its productivity tools, including Azure Office and Xbox gaming, but it has also strengthened its growth metrics.
Microsoft Corp. (NASDAQ:MSFT) is one of the best forever stocks to buy now as it regularly achieves strong financial results, and its most recent quarter was no exception. Its income from sales and operating earnings both rose by 15% compared to the previous year, showing remarkable performance for a company of its stature. Its earnings per share (EPS) reached $2.95, surpassing analysts’ predictions. This figure is also more than twice as high as it was five years prior.
One of the catalysts behind Microsoft’s robust growth is its cloud unit, Azure, which has received a significant boost amid AI integrations. With a 31% market share, it remains well-positioned data to generate significant value amid strong demand for cloud solutions.
Additionally, Microsoft Corp. (NASDAQ:MSFT) has consistently returned value to investors through dividends. The stock currently yields 0.7% with a quarterly dividend of about $0.75 per share, one of the biggest among the tech giants.
The company’s P/E ratio stands at 32, indicating a high valuation, consistent with its status as a leading technology firm. The company also remains in a solid financial position, with $23.32 billion in total free cash flow as of the end of June.
279 hedge funds hold long positions in Microsoft Corp. (NASDAQ:MSFT) in the second quarter of 2024, down from 293 in the previous quarter. Bill & Melinda Gates Foundation Trust is the highest shareholder, with a stake worth $15.59 billion.
Alger Spectra Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q2 2024 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) is a beneficiary of corporate America’s transformative digitization. The company operates through three segments: Productivity and Business Processes (Office, LinkedIn, and Dynamics), Intelligent Cloud (Server Products and Cloud Services, Azure, and Enterprise Services), and More Personal Computing (Windows, Devices, Gaming, and Search). During the quarter, shares contributed to performance after the company reported strong fiscal third quarter results, underscoring its leadership position in the cloud and highlighted its role as a primary facilitator and beneficiary of AI adoption. Company revenue growth, operating margin, and earnings growth surpassed consensus expectations. The utility scale Azure cloud business grew 31% in constant currency of which 7% was AI related versus 3% two quarters ago. Further, management noted most of the AI revenue continues to stem from inference rather than training indicating high quality AI applications by Microsoft’s clients. Management also indicated that the significant cost-cutting programs in corporate America are done, suggesting that the cost optimization headwinds previously impacting Azure’s growth are over. Separately, management provided color on their new AI-productivity tool, Copilot, noting that approximately 60% of Fortune 500 companies are already using Copilot, and that the quarter witnessed a 50% increase in Copilot assistance integration within Teams. We continue to believe that Microsoft has the potential to hold a leading position in AI, given its innovative approach and demonstrated high unit volume growth opportunity.”
The best forever stocks to buy now are companies with solid underlying potential well poised to generate long-term value on share price gains, share buybacks, and dividend offerings. However, given that the artificial intelligence arms race is just but starting, there are under-the-radar AI stocks trading at highly discounted valuations that hold greater promise for anyone looking to diversify their portfolio. If you are looking for an AI stock that is more promising than MSFT, check out our report about the cheapest AI stock.
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