We recently published a list of Top 10 Stocks Everyone Is Talking About These Days. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against other top stocks everyone is talking about these days.
Major AI stocks are wavering as investors assess the impact of decreasing hardware costs and their effects on technology spending. T. Rowe Price’s Tony Wang said in a latest program on CNBC that while Mag. 7 companies are still strong, there are opportunities to look elsewhere as the technology-related gains broaden out.
“You saw the Mag. 7 really dominate the last two years, and I think going into this year, I think that there’s a lot of concern over the capex that’s being spent. I mean, they’re kind of becoming fundamentally different businesses in some respect in terms of the capital intensity. And then on top of that, you had kind of more inline reports, and so when you’re spending a lot of capex and you’re coming in line, I think that tends to set up for a tougher stock reaction. And so, you know, I think there’s other areas in tech that naturally things will broaden out to, like things that have more bottoming fundamentals and can have a little bit easier setup. So I think that, you know, we’re looking for more broadening, and I think that these are still very good companies and still like a core part of tech portfolios, but I think there’s opportunity elsewhere as well.”
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For this article, we picked 10 stocks currently trending on latest news and analyst ratings. With each stock we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A development team working together to create the next version of Windows.
Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Funds Investors: 279
Dan Niles of Niles Investment Management believes CapEx spending on Nvidia chips will slow down based on Microsoft Corp’s (NASDAQ:MSFT) outlook. Talking in a latest program on CNBC, Niles cited Microsoft’s latest statement:
“I look at what the biggest spender of AI capex is saying, which is Microsoft. One of the things that’s driving the market down today is IR from Microsoft in Australia, and they’re sort of clarifying some of the notes that came out on Friday. They’re saying, “Right, you know, we think supply and demand are going to be in balance by the end of our fiscal year, which, by the way, is June, so it’s not that far away, and we think our capex growth is going to slow to more in line with our revenue growth.” Well, capex growth is running 50 to 60%, while revenue growth is running in the mid-teens. So you look at that, and you go, “Okay, well that pretty much confirms the fact that capex is going to slow down.” So for the Nvidia print, it’s more interesting to just see what they have to say. Jensen looks out 10 years in.”
Mairs & Power Growth Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q4 2024 investor letter:
“Unlike the dot-com companies that operated at the turn-of-the-century, many of today’s technology companies are established businesses with significant cash flows. We have argued, and continue to argue, that many of these investments are perfectly aligned with our investments process in that they embody durable competitive advantages, above-average growth prospects, and excellent management teams.
A perfect example is Microsoft Corporation (NASDAQ:MSFT), which has grown to become the largest holding in the Growth Fund. Microsoft has a near monopoly on the office software productivity market with its Microsoft Office Suite. The company’s Azure platform is a leader in cloud computing and has been steadily gaining share. Thanks to its Office and Azure products, the company is deeply embedded within many enterprise IT ecosystems. Therefore, it should be well-positioned to expand its presence within its customer base, as it rolls out premium-price AI solutions. The company is not resting on its laurels and plans on spending an astounding $80 billion in 2025 to build out AI data centers.”
Overall, MSFT ranks 2nd on our list of top stocks everyone is talking about these days. While we acknowledge the potential of MSFT as an investment, our conviction lies in the belief that under the radar 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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Disclosure: None. This article is originally published at Insider Monkey.
