10. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders In Q2 2024: 279
Category: Most popular with HFs and underweight among mutual funds
Microsoft Corporation (NASDAQ:MSFT) is the penultimate mega cap technology giant on our list. The firm’s Windows operating system is the most widely used product of its kind in the world. Microsoft Corporation (NASDAQ:MSFT) also enjoys a key position in the cloud computing industry through its Azure cloud computing platform. Consequently, as cloud computing accounted for $28.5 billion of Microsoft Corporation (NASDAQ:MSFT)’s $64 billion in FYQ4 revenue, it plays a central role in its hypothesis. Additionally, as it has invested billions of dollars into OpenAI, investors are also on the watch out for Microsoft Corporation (NASDAQ:MSFT) being able to generate profit from the AI products that it sells to businesses through its enterprise software division. This has also led to a 10.7% share price drop since July which accelerated after Microsoft Corporation (NASDAQ:MSFT)’s latest earnings report.
Baron Funds mentioned Microsoft Corporation (NASDAQ:MSFT) in its Q2 2024 investor letter. Here is what the firm said:
“Microsoft Corporation is the world’s largest software and cloud computing company. Microsoft was traditionally known for its Windows and Oice products, but over the last five years it has built a $135 billion run-rate cloud business, including its Azure cloud infrastructure service and its Oice 365 and Dynamics 365 cloud-delivered applications. The stock contributed to performance because of continued strong operating results and investor enthusiasm regarding Microsoft’s leadership across the secular megatrends of AI and cloud computing. Recent business momentum continued to show evidence of the strength and attractiveness of Microsoft’s product portfolio among its customer set: (1) Azure OpenAI – its suite of AI services – is now used by 65% of the Fortune 100 and contributed 7% of Azure revenue (an annualized run rate of $5.2 billion); (2) GitHub Copilot – its AI code writing service – is bending the productivity curve for developers (reports of 40%- plus improvements in developer efficiency) and now has 1.8 million paid subscribers, with growth accelerating to over 35% quarter-over-quarter; and (3) Copilot Studio – its AI application service that makes it easier for anyone to build an application, automate a workflow, or create a Copilot using natural language. 30,000 organizations across every industry have used Copilot Studio to customize Copilot for Microsoft 365 or build their own, up 175% quarter-over- quarter. In the March quarter, Microsoft again reported better-than-expected financial results, highlighted by Microsoft Cloud growing 23% year- over-year, with the fastest commercial bookings in six quarters, and Azure accelerating to 31% constant currency growth, up from 28% in the previous quarter. June quarter guidance came in-line with consensus, but the company provided higher guidance for the most important segment, Intelligent Cloud, on the back of continued strong trends across Azure and Azure OpenAI. We remain confident that Microsoft is one of the best- positioned companies across the overlapping software, cloud computing, and AI landscapes.”
