5 Best Tech Stocks for the Next 5 Years

1. Microsoft Corp (NASDAQ:MSFT)

Number of Hedge Fund Investors: 306

UBS believes integration of AI with Bing search would help Microsoft Corp (NASDAQ:MSFT) gain market share in the search industry. UBS also believes in the next few years Microsoft Corp’s (NASDAQ:MSFT) push to monetize its AI offerings would drive “incremental” revenue growth for the company. Morgan Stanley earlier this month said over the next 12 months Microsoft Corp’s (NASDAQ:MSFT) generative AI tools would give it a boost. Morgan Stanley cited its survey of CIOs in which about 68% of CIOs said they plan to adopt Microsoft Corp’s (NASDAQ:MSFT) generative AI solutions at some point in the next year.

Morgan Stanley analyst Keith Weiss increased his price target on the stock to $450 from $415.

Polen Focus Growth Strategy stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its fourth quarter 2023 investor letter:

“The largest relative detractors in the quarter were Illumina, Airbnb, and Microsoft Corporation (NASDAQ:MSFT). Microsoft’s business continues to grow well, albeit at slower rates than in the previous few years. That said, it was a relative detractor to the Portfolio because our 7% average weighting for both the quarter and the year were significantly lower than the 12% benchmark weighting in the Russell 1000 Growth. Microsoft shares appreciated a benchmark-beating 19% in 4Q and 58% in 2023.

In addition, we also expect generative AI to help not just Microsoft’s Azure cloud service business grow, but also to be an additional growth driver for the company’s Productivity Suite (Word, Excel, PowerPoint, etc.) and Power Platform, which helps build internal apps for businesses.

Microsoft has created generative AI co-pilots, which are bots that use large language models (LLMs) to make a customer’s Microsoft software even more functional. As an example, co-pilot offerings from Microsoft can take text and data from Word and Excel and automatically create a PowerPoint presentation from it. We expect to see generative AI demand from Azure customers becoming a larger contributor to growth of that segment while Microsoft Co-pilot becomes a premium feature of the high-end Microsoft commercial bundles, leading to better pricing. Given the strength of the company’s existing businesses and the expected strong product cycle driven by generative AI advancements, we chose to add to our Microsoft position. It is now our second largest position behind Amazon.”

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