13 NASDAQ Stocks with the Highest Upside Potential

11. Microsoft Corp. (NASDAQ:MSFT)

Average Upside Potential as of April 8: 39.72%

Number of Hedge Fund Holders: 317

Microsoft Corp. (NASDAQ:MSFT) develops and supports software, services, devices and solutions worldwide. These are mainly offered through its Productivity and Business Processes segment, the Intelligent Cloud, and the More Personal Computing segment. It sells its products through OEMs, distributors, and resellers, and also directly through digital marketplaces, online, and retail stores.

On April 8, Jefferies lowered the price target on Microsoft from $500 to $475, while acknowledging the macroeconomic pressures that slightly reduced their fiscal year estimates by 1% to 2% for the software and internet sectors. However, the firm maintained a Buy rating on the stock because of the company’s position in AI-driven cloud, productivity, and business solutions.

In FQ2 2025, the company’s AI revenue surged by 175% year-over-year, which represented a $13 billion annual run rate. While Azure’s growth recently slowed down a bit, this performance excluded the impact of AI in this segment. Azure AI services grew by 157% in FQ2, which was 13 points of the segment’s overall growth. Over 200,000 monthly users are already on Azure AI Foundry, and Azure OpenAI app usage has doubled. Azure cloud revenue grew 31%. Microsoft Corp. (NASDAQ:MSFT) now expects 31% to 32% Azure growth in FQ3.

Generation Global Equity Strategy expressed optimism about the company due to its AI leadership potential. It stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q4 2024 investor letter:

“Microsoft Corporation (NASDAQ:MSFT), the world’s largest software company, has been in the portfolio for over a decade. We like the firm because its products align closely with society’s evolving needs. As the world digitises, demand for Microsoft’s tools will continue to grow. The company enjoys a wide economic moat – built on its unique market position, deep customer understanding and extensive global footprint.

Microsoft’s management team has a long-term vision. It makes bold investments in future growth, most recently in AI. We forecast that the IT intensity of the economy will double over the next 15 years. Microsoft is a rare company with USD 250 billion in revenues, projected to grow at 16% annually over the next five years.14 Earnings-per share could grow faster. Despite its near-term valuation appearing high, we believe Microsoft is well positioned to lead in the AI era, potentially doubling or tripling its market share. Additionally, we expect returns on capital (ROC) for its AI related investments to match historical levels, despite market scepticism.

There are risks. Demand for AI systems may not materialise as expected, and increasing pricing power among suppliers like Nvidia could pressure margins. Still, from our analysis we see substantial long-term value in this name.”