1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 258
YTD Price Change: -31.8%
Microsoft Corporation (NASDAQ:MSFT) is a Redmond, Washington-based technology conglomerate operating in the consumer electronics, computer hardware, and software business.
Microsoft Corporation’s (NASDAQ:MSFT) stock price has been weighed down due to growth concerns, but J. Derrick Wood at Cowen thinks that the company can become one of the best rebound stocks as it offers durable growth through its commercial segment. Furthermore, Microsoft Corporation (NASDAQ:MSFT) has a significant TAM to address and monetize in the cloud, data, and security industries. The results of the commercial segment during the most recent quarter and the guidance provided by the company were also positive. Experts also believe that the cloud computing story is still intact for Microsoft Corporation (NASDAQ:MSFT), and the weakness in the PC market and adverse foreign exchange impact are short-term headwinds.
Here’s what Lakehouse Capital said about Microsoft Corporation (NASDAQ:MSFT) in its September letter:
“During the month, the Fund initiated a new position in Microsoft Corporation (NASDAQ:MSFT), a name that is no doubt familiar to our investors. The company was founded by Bill Gates and Paul Allen in a friend’s garage in 1975 and began dominating the operating system market with MS-DOS by the mid-1980s. The company has come a long way since then and is now widely considered the most critical and indispensable IT mega-vendor for businesses globally. In addition to its well-known Windows operating systems and Office productivity suite, the company has a broad portfolio of strategic products, including a rapidly growing public cloud business in Azure and a sizeable gaming presence.
Microsoft’s foundational products, Office365 and Windows365, are ubiquitous and highly penetrated with circa 90% and 80% market share, respectively. These solutions are deeply ingrained in commercial and personal use globally and across all industry sectors. They serve as stable, high-margin cash flow generators for Microsoft whilst they expand and invest in other growth areas of the business. One particular growth area, which is the most exciting part of Microsoft’s business in our view, is their public cloud service, Azure.
Azure has grown at a rapid clip over the past decade to cement itself as the second-largest cloud service provider globally, behind Amazon Web Services. The business benefits from strong secular tailwinds as cloud adoption continues unabated and there is considerable runway ahead – it’s currently estimated that less than 20% of global IT spend is currently in the cloud. Research indicates that 80% of enterprises use Azure and its market share has grown to 21%, up from 13% five years ago. The mission-critical nature of the product, which is similar to many of Microsoft’s other solutions, is incredibly attractive as it leads to sticky, recurring revenue streams. Something we love to see…” (Click here to read the full text)
Follow Microsoft Corp (NASDAQ:MSFT)
Follow Microsoft Corp (NASDAQ:MSFT)
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