8 Most Profitable Tech Stocks Right Now

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1. Microsoft (NASDAQ:MSFT)  

Number of Hedge Fund Holders: 279  

TTM Net Income: $88.13 Billion  

5-Year Net Income CAGR: 17.57%

Microsoft (NASDAQ:MSFT) is a technology giant offering a diverse range of products and services, including its Windows operating system, Office productivity suite, Azure cloud platform, and Xbox gaming console. Microsoft (NASDAQ:MSFT) is also a leader in AI, enterprise software, and cloud computing, with its Azure being a key growth driver.

Microsoft (NASDAQ:MSFT) is accelerating its data center capacity expansion plans and is poised to overcome capacity constraints for AI training and inferencing, due to its strategic partnerships with Oracle and other hyper scalers, In March, Microsoft (NASDAQ:MSFT) and Oracle announced to expand their partnership to meet the growing demand for Oracle Database Azure. The service will now be available in 15 regions globally, with 5 new regions added this year. Oracle Database Azure is now available in Germany and will allow customers to run Oracle database services on hardware in Azure data centers.

This collaboration helps Microsoft (NASDAQ:MSFT) offset some pressure while its investments in data centers, CPUs, and GPUs will support the growing demand for AI applications. In the financial year 2024, Microsoft (NASDAQ:MSFT) increased its capital investments by 58% to $44.5 billion. The company is well-positioned to capture the rapidly growing market for AI training and inferencing. Microsoft (NASDAQ:MSFT) plans to construct 20 data centers globally, in addition to its existing 300+ data center footprint spanning 60+ regions. This expansion will enable the company to increase its capacity and provide more efficient and scalable services to its customers.

Microsoft’s (NASDAQ:MSFT) dominant position in the cloud and AI and significant investments in data center expansion make it an attractive investment opportunity. The company’s earnings are projected to increase by 10.21% in the current year. With a consensus Buy rating from industry analysts, the stock has a target price of $495.97, which represents a 17.57% upside potential from its current level.

While we acknowledge the potential of Microsoft (NASDAQ:MSFT) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. 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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