1. Microsoft Corporation (NASDAQ:MSFT)
Bill & Melinda Gates Foundation’s Investment Stake: $12.4 billion
Number of Hedge Fund Investors In Q3 2024: 279
Microsoft Corporation (NASDAQ:MSFT) is one of the biggest technology companies in the world. Its success in making Windows the most widely used PC operating system in the world is responsible for Bill Gates’ riches. However, since Gates’ retirement, Microsoft Corporation (NASDAQ:MSFT) has diversified its business and made itself into one of the most important cloud computing players in the world. Cloud computing has also driven the firm’s hypothesis in 2024 due to the billions of dollars that it has invested in OpenAI. Investors expect Microsoft Corporation (NASDAQ:MSFT) to drive a profit from its AI investments, particularly by providing AI services to the business world through the Azure cloud computing platform. After the firm indicated during its Q2 earnings call that profitability might be further down the road, the stock sank and is down by 4.5% since then. Consequently, for Microsoft Corporation (NASDAQ:MSFT) to scale previous highs and retake the crown of the world’s most valuable company, it has to perform well with its cloud computing business on the AI front.
Mar Vista Investment mentioned Microsoft Corporation (NASDAQ:MSFT) in its Q3 2024 investor letter. Here is what the fund said:
“Microsoft Corporation (NASDAQ:MSFT) stock was pressured in the quarter as investors fretted over rising capex as Microsoft invests heavily in the burgeoning generative AI market. Investors are concerned about the rising capital intensity of the business and the uncertain return on that investment. We continue to believe that Microsoft occupies a strong competitive and strategic position and that it is poised to capture market share as businesses, both large and small, navigate the transition to a digital-first landscape and embrace generative AI-driven productivity tools. The company’s commanding presence in the enterprise arena, combined with its comprehensive product portfolio encompassing Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS), establishes it as a crucial provider of IT solutions for companies of all scales. Microsoft is effectively executing its strategy in a sizable market by offering a roadmap for digital transformation and adoption of cutting-edge, AI-driven solutions, such as ChatGPT and its suite of Copilot applications, which enhance productivity and reduce costs. Consequently, we anticipate that Microsoft’s solutions should exhibit resilience even in a more challenging macroeconomic environment, supporting low double-digit growth in intrinsic value within our investment horizon.”
MSFT is the top stock of Bill Gates’ investment firm. While we acknowledge the potential of MSFT as an investment, 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.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
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