1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is an American multinational corporation and technology company that develops and markets software, services, and hardware. The company’s AI strategy is evident through its partnership with OpenAI and the integration of AI across Azure, Office 365, and security solutions which together create a strong ecosystem.
On Monday, October 21, Microsoft had its “AI Tour” in London, announcing the rollout of its Copilot AI features designed to enhance productivity by automating routine administrative tasks. The company plans to allow businesses to create their own autonomous agents within the Copilot Studio, Microsoft’s platform for building and customizing its “Copilot” assistants, fending off challenges from Salesforce. These agents can be built in the studio with low code or no code instructions, which in turn allow users to create AI-driven workflows without needing major technical expertise. The software will be available for public preview next month.
The technology company has also revealed that it will launch 10 new autonomous agents in Dynamics 365, which is the company’s suite of enterprise resource planning and customer relationship management apps. The company’s autonomous agents aim to achieve a return on investment in AI. As per CFO Amy Hood, the company has spent $19 billion on capital expenditures, including finance leases, a large portion of which was derived from AI and cloud-related needs. With 2.1 million users engaged with Copilot, Microsoft is banking heavily on the platform to generate revenues. As of Q4, the company achieved $36.8 billion in quarterly revenue from its cloud services, which includes its AI platform, a 21% year-over-year increase.
While all these announcements may seem like a big leap for Microsoft, the company received a rare downgrade last month over concerns about the tech giant’s over-reliance on Nvidia for its AI infrastructure. On September 23, analysts at D.A. Davidson, an investment banking company, downgraded the company’s stock from “Buy” to “Neutral”, keeping their price target unchanged at $475. While the analysts are still positive about Microsoft, they note how the company lags behind its rivals in AI chip development, something its rivals started working on as early as a decade ago.
“They started their chip development later than Amazon and Google. But apart from that, they’re doing what they need to do.”
-Gil Luria, an analyst at D.A. Davidson
Overall, MSFT ranks first among the 15 AI News Investors Should Not Miss. While we acknowledge the potential of MSFT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher 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.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
