1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 259
Microsoft Corporation (NASDAQ:MSFT) on February 22 unveiled a preview release of its latest Bing and Edge applications for iPhone and Android that feature new functionalities such as voice search and access to its AI chatbot. Additionally, the company revealed the AI-driven Bing for the telecommunications platform Skype. It is one of the top AI stocks to consider.
According to Morgan Stanley analyst Keith Weiss, Microsoft Corporation (NASDAQ:MSFT)’s EPS growth is expected to accelerate in each of the next five quarters starting from the Q2 low. This is due to easing comparisons, price hikes, reduced foreign exchange headwinds, and decelerating operating expenses. After refining its cloud and overall bottom-up gross margin models, the firm believes that achieving Q3 targets seems possible. While maintaining an Overweight rating and $307 price target on Microsoft Corporation (NASDAQ:MSFT) on February 13, the firm emphasized that there are more things to like about Microsoft Corporation (NASDAQ:MSFT) than AI.
According to Insider Monkey’s Q4 data, 259 hedge funds were long Microsoft Corporation (NASDAQ:MSFT), compared to 269 funds in the prior quarter. Bill & Melinda Gates Foundation Trust is the largest stakeholder of the company, with 39.2 million shares worth $9.4 billion.
Polen Global Growth Strategy made the following comment about Microsoft Corporation (NASDAQ:MSFT) in its Q4 2022 investor letter:
“In the case of Microsoft Corporation (NASDAQ:MSFT), the company is performing very well. Azure now represents nearly 25% of the total business and continues to compound at a higher rate. Although growth is moderating a bit recently (as it is for AWS and Google Cloud Platform as well), these three platforms collectively generated more than $140 billion in revenue during the last 12 months and are still growing at a healthy rate. Further, Microsoft Cloud, or commercial cloud (which includes Azure and other cloud services, Office 365 Commercial, the commercial portion of LinkedIn, Dynamics 365, and other cloud properties) continues to grow roughly 30% and is now about half the business. Mathematically, commercial cloud could decelerate to 20% growth with all other segments decelerating to zero growth and total company revenue growth would still be at least double digits. We believe Microsoft is positioned to compound underlying earnings per share at a mid teens rate over the next five years. At 22x earnings, we felt the valuation was attractive and that it should be a large position.”
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