1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 259
Microsoft Corporation (NASDAQ:MSFT) announced on February 22 that it has released new applications for its Bing search engine and Edge web browser, which are powered by artificial intelligence, for both iOS and Android devices. The new apps include features that are powered by ChatGPT. Additionally, Microsoft Corporation (NASDAQ:MSFT) has stated that its Skype app will receive an AI-powered chat experience. Earlier this month, Microsoft Corporation (NASDAQ:MSFT) began rolling out ChatGPT functionality to users of its Bing search engine on desktop computers.
On February 13, Morgan Stanley analyst Keith Weiss forecasted that Microsoft Corporation (NASDAQ:MSFT)’s EPS growth will accelerate in each of the next five quarters, starting from the Q2 low point. The analyst attributed this projection to several factors, including easier comparisons, price increases, a decrease in foreign exchange headwinds, and a slowdown in operating expenses. According to Morgan Stanley, refining its cloud and overall gross margin models at the end of Q2 makes achieving the Q3 target seem possible. Morgan Stanley maintained its Overweight rating and a $307 price target on Microsoft. The firm also noted that it sees more positive aspects of the company than just its artificial intelligence capabilities.
According to Insider Monkey’s Q4 data, 259 hedge funds were bullish on Microsoft Corporation (NASDAQ:MSFT), compared to 269 funds in the prior quarter. Bill & Melinda Gates Foundation Trust is the biggest 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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