12 Best Technology Stocks to Invest In for the Long Term

2. Microsoft Corp. (NASDAQ:MSFT)

Number of Hedge Fund Holders: 279

Microsoft Corp. (NASDAQ:MSFT) is a technology company that has recently expanded its AI capabilities with the launch of enhanced AI models in its Azure AI model catalog, catering to several industry needs. This strategic move is paying off, as evidenced by a strong FQ1 2025 performance.

Its cloud computing platform, Azure, seamlessly integrates on-premises and cloud-based systems for enterprise clients. The company reported a 16% year-over-year revenue growth, reaching $65.6 billion in FQ1 2025. Cloud revenue surged 22% to exceed $38.9 billion, driven by a 23% increase in Azure-led server products and cloud services. Azure Arc’s customer base surpassed 39,000 across various industries, reflecting over 80% year-over-year growth. Azure Arc is a hybrid cloud management platform that extends the capabilities of Azure to non-Azure environments.

The company’s AI business is anticipated to achieve an annual revenue run rate of $10 billion in the next quarter, the fastest growth in its history. Microsoft Corp. (NASDAQ:MSFT) has also partnered with Accenture and Avanade to assist businesses in using GenAI and Copilot tools to transform their operations. This collaboration is expected to drive significant financial growth for the company.

RiverPark Large Growth Fund noted the company’s near-term Azure growth headwinds due to infrastructure limitations but remains confident in its long-term growth prospects. It stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q3 2024 investor letter:

“Microsoft Corporation (NASDAQ:MSFT): MSFT was a top detractor in the third quarter following a fiscal fourth quarter earnings report that featured inline operating metrics but mixed guidance. Positively, the company reported strong revenue (+15%) and earnings growth (+10%), powered by Azure (+30%), and operating margins of 43%. Guidance however calls for lower than expected fiscal first quarter Azure revenue as infrastructure constraints limit growth, and higher capital expenditures throughout the company’s fiscal 2025 to alleviate these constraints. The company expects growth to reaccelerate in the back half of fiscal 2025 as more AI capacity comes online.

Cloud-based services have become the company’s largest revenue and earnings producer. The company’s Azure platform alone has the potential to grow to more than $200 billion in annual revenue over the next decade. Overall, we believe that the company will continue to deliver double-digit revenue and EPS growth and generate an enormous amount of free cash flow to return to shareholders and use for acquisitions.”