3. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders as of Q4: 317
Arrowstreet Capital’s Equity Stake: $6.54 Billion
Microsoft Corporation (NASDAQ:MSFT) posted $69.63 billion in Q4 revenue, surpassing expectations and reflecting a 12.27% year-over-year increase. Its earnings per share (EPS) of $3.23 also exceeded analyst forecasts of $3.12, reinforcing the company’s solid market position and ongoing profitability. Beyond financial performance, the company continues to lead in technological innovation. In February 2025, it made a major advancement in quantum computing by developing a topological qubit, a breakthrough with potential applications in artificial intelligence, medicine, and cryptography. This achievement strengthens Microsoft’s role as a global leader in quantum research and enhances its long-term growth potential.
Microsoft Corporation (NASDAQ:MSFT) shares declined on Monday, March 10, as investor concerns over a potential recession grew amid ongoing trade policy uncertainty and tariff changes. In February, President Donald Trump announced a 25% tariff on Canadian and Mexican goods and a 10% tariff on Chinese imports. While tariffs on Canada and Mexico were temporarily postponed for a month, those on Chinese goods took effect as scheduled. By March 4, Trump proceeded with the Canadian and Mexican tariffs and introduced an additional 10% tariff on Chinese imports. The fluctuating trade policies have created uncertainty around pricing stability and supply chains, prompting some investors to offload stocks, particularly in the technology sector, where companies like Microsoft Corporation (NASDAQ:MSFT) rely on global markets for production and distribution. As a result, growth stocks may face increased caution from investors. Trump has acknowledged the possibility of a recession, framing it as a “period of transition” due to his administration’s economic policies.
The company remains a strong investment choice due to its consistent revenue growth, exceeding expectations with a 12.27% year-over-year increase, and its leadership in cutting-edge technologies like quantum computing and artificial intelligence. Despite short-term market volatility caused by trade uncertainties, Microsoft Corporation (NASDAQ:MSFT)’s solid financials, innovation-driven expansion, and dominant market position make it a resilient stock with long-term growth potential.
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.”
