We recently compiled a list of the 10 Stocks That Members of Congress Own. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against the stocks that members of Congress own.
Members of the US Congress have historically been permitted to own and actively trade stocks, a practice frequently scrutinized and critiqued for potential conflicts of interest and ethical concerns related to insider trading. Although this issue has periodically surfaced in public debate, significant legislative action took place with the introduction of the Stop Trading on Congressional Knowledge Act in 2012, which explicitly prohibited members of Congress and federal employees from using non-public information for personal profit and required prompt disclosure of stock trades. Nevertheless, the enforcement of the act has been unclear, as numerous lawmakers have drawn criticism for late or incomplete reporting of transactions.
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Most recently, in December 2024, President Biden publicly endorsed a full ban on stock trading by members of Congress, asserting that lawmakers should not be able to profit from the stock market while serving in office. The newly inaugurated President Trump has had a similar stance for many years, as he famously stated the following:
“We want a ban on members of Congress getting rich by trading stocks on insider information.”
While it is clear that any US administration has publicly positioned itself against stock trading by high-ranked public officials and members of the Congress, the reality is often much more complex and difficult to enforce. It is even more difficult to prove whether a public official did use non-public information in making his/her investment decisions – particularly because the official may invoke the Mosaic approach, arguing that their trades were based on many pieces of publicly available information and personal analysis and reasoning. The key takeaway for investors is that we may never witness a perfect world in which members of the Congress do not own and profit from their stock investments.
The topic of stock trading by the members of Congress or other highly ranked officials has been widely discussed by investors and market enthusiasts for many years, driven by the perception that lawmakers’ trades might offer insights into upcoming market-moving policies or future legislation. This ongoing scrutiny has even led to the creation of thematic ETFs that track the disclosed trades of US legislators and weigh the stocks by their popularity among the members of the Congress. This allows retail investors to replicate congressional investment strategies and potentially profit. Anecdotal portfolios of individual Congress members or high rank officials emerged as well, some of which even managed to outperform the broad US market. These products highlight how public attention has evolved from merely ethical considerations to practical investment opportunities, reflecting investors’ belief in Congress members’ informational advantage or superior market timing.
We believe that monitoring the trades of lawmakers may be especially useful during times of rapid change, such as a drastic regime change during which the views of the new administration significantly diverge from those of the old one. The Trump 2.0 administration has given investors vertigo so far, as it becomes more and more difficult to predict the next moves related to tariffs, immigration, public spending, healthcare budgets and defense. We believe such periods of massive change would bring significant opportunities for people knowing (or inferring using the Mosaic approach) the next moves of the US administration: for instance, any sudden cuts in Medicare/Medicaid reimbursement policies may drastically hit the Healthcare sector, favoring thematic put options; Defence stocks may witness uplift if President Trump shifts his stance regarding the continuation of military aid to Ukraine; government contractors and consultants, which are currently beaten down, may witness a surge in stock price if the new Government announces any major new projects. All in all, we advise to exercise cautiousness when interpreting congressional trading data, as inferring actionable insights from lawmakers’ investments may lead to misleading conclusions or overlooked risks.
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Our Methodology
We used the Periodic Transaction Reports that US politicians are obliged to file, as well as thematic ETFs to pick the most widely owned stocks by the members of the US Congress. We then compared the list with Insider Monkey’s proprietary database of hedge funds’ ownership as of Q4 2024 and included in the article the top 10 stocks with the largest number of hedge funds that own the stock.
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).
Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 317
Microsoft Corporation (NASDAQ:MSFT) is a multinational technology company that develops, licenses, and supports a wide range of software, hardware, and cloud services. Its key products include the Windows operating system, Microsoft Office productivity suite, and Azure cloud platform. The company also manufactures hardware like the Surface devices and Xbox gaming consoles. MSFT generates revenue through software sales, cloud services, subscription-based products (e.g., Office 365, Xbox Game Pass), and advertising.
Microsoft Corporation (NASDAQ:MSFT) delivered impressive Q2 results, highlighted by a 75% growth in constant currency bookings and a surge in Azure AI contracts. The company’s AI revenue, largely driven by inference and post-training workloads as well as Copilot-related income, reached $13 billion. While MSFT is facing capacity constraints in its AI infrastructure, it anticipates that supply and demand will align by the end of fiscal year 2024. The company is making substantial investments in data center infrastructure and plans to transition toward more server-focused investments once its global footprint is established. Microsoft 365 Copilot is surpassing expectations, with initial buyers increasing their usage, while Copilot Chat, launched in January, has gained strong traction with over 400 million commercial M365 users.
Microsoft Corporation (NASDAQ:MSFT) remains committed to both AI innovation and traditional cloud migration, despite some hurdles in non-AI Azure workloads. Its partnership with OpenAI continues to thrive, positioning MSFT as OpenAI’s primary partner through 2030. The company has also effectively managed gross margin pressures related to AI, improving overall margins in fiscal year 2025 by leveraging operating expense efficiencies. These results reflect MSFT’s dedication to maintaining a balanced approach between cutting-edge AI developments and strengthening its broader cloud offerings, ensuring sustained growth and market leadership. With at least 317 hedge funds owning the stock, MSFT is also one of the stocks owned by Congress.
Overall MSFT ranks 2nd on our list of the 10 stocks that members of Congress own. 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 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.
