1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 258
Microsoft Corporation (NASDAQ:MSFT) is trading at a PE multiple of 25x and is yielding 1.12% to investors, as of October 25. The company is profitable and efficient at making profits for investors. Microsoft Corporation (NASDAQ:MSFT) has a trailing twelve-month operating margin of 42% and an ROE of 47.15%. Moreover, the company has a strong cash position and has free cash flows of $65 billion.
On October 20, UBS analyst Karl Keirstead revised his price target on Microsoft Corporation (NASDAQ:MSFT) to $300 from $330 and maintained a Buy rating on the shares. This October, Piper Sandler analyst Brent Bracelin adjusted his price target on Microsoft Corporation (NASDAQ:MSFT) to $275 from $312 and reiterated an Overweight rating on the shares.
At the close of Q2 2022, 258 hedge funds were long Microsoft Corporation (NASDAQ:MSFT) and held stakes worth $56 billion in the company. Of those, Fisher Asset Management was the top investor in the company and disclosed stakes of $7.36 billion.
Here is what Lakehouse Capital had to say about Microsoft Corporation (NASDAQ:MSFT) in its September 2022 investor 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)
You can also take a look at 15 Largest German Companies by Revenue and 11 Best Large Cap Stocks To Invest In.
