#4 Microsoft Corporation (NASDAQ:MSFT)
– Investors with Long Positions (as of December 31): 140
– Aggregate Value of Investors’ Holdings (as of December 31): $23.42 Billion
– Q1 Return: 0.3%
Hedge fund sentiment towards Microsoft Corporation (NASDAQ:MSFT) increased significantly in the final quarter of 2015, with the number of funds tracked by Insider Monkey long the stock climbing to 140 from 113 quarter-over-quarter. Similarly, the value of their stakes in Microsoft grew to $23.42 billion from $19.31 billion. The shares of the technology giant are up by 33% in the past 12 months, though they are flat thus far in 2016. Microsoft’s revenue for the six months that ended December 31 totaled $44.18 billion, down from $49.67 billion reported for the same period of the prior year. The decline in the company’s top-line figure was mainly driven by the impact of a net revenue deferral related to Windows 10, as well as foreign currency headwinds. Intelligent Cloud revenue for the six months that ended December 31, which accounted for approximately 28% of total revenue, increased by 6% year-over-year to $12.23 billion. Server products and cloud services revenue grew by $423 million year-over-year, primarily due to revenue growth of 124% from Microsoft Azure. Recent reports reveal that Microsoft’s Azure cloud business continues to add business customers and developer subscribers at a high rate, with 120,000 new subscriptions to Azure being added each month. Amazon’s Amazon Web Services (AWS) continues to dominate the cloud space, but Microsoft’s Azure has been consistently gaining market share. Jeffrey Ubben’s ValueAct Capital reported owning 56.62 million shares of Microsoft Corporation (NASDAQ:MSFT) through the round of 13F filings for the December quarter.
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#3 Amazon.com Inc. (NASDAQ:AMZN)
– Investors with Long Positions (as of December 31): 141
– Aggregate Value of Investors’ Holdings (as of December 31): $17.32 Billion
– Q1 Return: -12.17%
Amazon.com Inc. (NASDAQ:AMZN) also received more attention from the hedge fund industry during the fourth quarter of 2015, as the number of funds with stakes in the company increased to 141 from 113, while the value of those stakes climbed to $17.32 billion from $14.98 billion quarter-over-quarter. The tech-driven retailer has seen its market value drop by 12% since the beginning of 2016, which may represent an expected correction after it was one of the top performing stocks of 2015. Earlier this week, Robert Peck, an analyst at SunTrust Robinson Humphrey, reiterated his ‘Neutral’ rating on Amazon.com while stating that the company’s AWS is worth over $100 billion. The analyst has a price target of $600 on the stock. Recent estimates show that Public IT cloud services revenue will cross the $140 billion mark in 2019, increasing from approximately $70 billion in 2015. Meanwhile, the market for Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) offerings is estimated to reach $50 billion by 2019 from roughly $20 billion in 2015. Mr. Peck believes that Amazon.com will be able to maintain its dominant position in the cloud space, arguing that the company needs to opt for price cuts to retain subscribers and grow its customer base. The analyst suggests that possible price cuts will reduce the likelihood of seeing some customers switching to competing services from Microsoft and Google. Stephen Mandel’s Lone Pine Capital upped its stake in Amazon.com Inc. (NASDAQ:AMZN) by 14% during the December quarter, ending 2015 with 2.21 million shares.
