1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is an American multinational corporation that is widely recognized for its software products like the Windows operating system. The company has established itself as a key player in the global gaming market through its development of Xbox consoles and gaming services. Additionally, the company has made significant strides in the gaming industry, particularly with its acquisition of Activision Blizzard for nearly $69 billion in October 2023. With this acquisition, Microsoft Corporation (NASDAQ:MSFT) gains access to a host of popular franchises, including Call of Duty, Warcraft, Diablo, Overwatch and Candy Crush, which have accelerated growth in the company’s gaming business across mobile, PC, console, and cloud platforms. This landmark deal not only enhances Microsoft’s gaming portfolio but also positions it as one of the largest gaming companies in the world.
The company reported strong financial results for its fiscal fourth quarter of 2024, showcasing significant growth across various segments. The company achieved revenue of $64.7 billion, marking a 15% increase compared to the same period last year. Notably, Microsoft Corporation’s (NASDAQ:MSFT) gaming business saw an impressive 44% rise in revenue, driven largely by the acquisition of Activision Blizzard, which contributed 48 points to this growth. Xbox content and services revenue surged by 61%, slightly exceeding expectations, with a net impact of 58 points from the Activision Blizzard deal.
In addition to revenue growth, Microsoft Corporation (NASDAQ:MSFT) reported an operating income of $27.9 billion and a net income of $22 billion for the quarter, reflecting increases of 15% and 10% year-over-year, respectively. In its gaming division, the company highlighted its expanding user base, which has now reached over 500 million monthly active users across platforms and devices. Furthermore, the company previewed a record 30 new titles at its showcase this quarter, with popular games like Call of Duty: Black Ops 6 set to launch on Game Pass.
During the Q4 2024 earnings call, management shared that the success of the Fallout TV show on Amazon Prime also contributed to increased engagement with the franchise on Game Pass, showcasing Microsoft’s strategy to connect its gaming IPs with broader entertainment audiences. Fallout made its debut on Amazon Prime in the quarter ended June 30, 2024, and it became the second most-watched title on the platform. As a result of the show’s popularity, the hours played on Game Pass for Fallout games increased nearly five times compared to the previous quarter.
On September 16, 2024, Microsoft Corporation (NASDAQ:MSFT) announced a quarterly dividend of $0.83 per share, which is an increase of 10% from the previous quarter. This dividend will be paid on December 12, 2024, to shareholders who are on record as of November 21, 2024. Additionally, the board approved a new share repurchase program allowing for up to $60 billion in buybacks, which does not have an expiration date and can be terminated at any time.
This combination of strategic growth and solid financial performance makes Microsoft Corporation (NASDAQ:MSFT) an appealing investment opportunity. According to Insider Monkey’s Q2 database of over 900 hedge funds, 279 hedge funds held stakes in MSFT.
Overall, MSFT ranks first among the 7 best gaming stocks to buy now. While we acknowledge the potential of gaming companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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