We recently compiled a list of the 10 Best Stocks for Beginners with Little Money According to Hedge Funds. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against the other beginner-friendly stocks.
Headlines from the US Stock Market
Uncertainty sweeps across the US with the incoming administration’s potential policies. Simultaneously, the Federal Reserve has decided to pause its rate-cutting cycle and the decision to resume easing is doubtful amidst Trump’s trade policies which are being deemed inflationary. Tariffs on foreign imports are considered a risk of reviving inflation. According to Reuters, Dustin Reid, chief strategist of fixed income at Mackenzie Investments in Toronto, reiterated the uncertainty looming as follows:
“Everything that is going on right now, from economic data to markets news and tariffs, adds up to a lot more uncertainty across all markets”
Recently, technology stocks benefitting from the business potential of AI witnessed a deep shock as Chinese startup DeepSeek revealed a large language model that can compete with American AI giants but at a fraction of the cost of OpenAI’s, Google’s, or Meta’s popular AI models. DeepSeek unveiled a free, open-source large language model that it claims took only two months and less than $6 to build.
The event raised a lot of concerns over America’s leadership in the AI sector and how big tech giants are investing heavily in AI models and data centers while DeepSeek somehow developed a highly competitive model without having as much compute as U.S. hyperscalers, as pointed out by Srini Pajjuri, semiconductor analyst at Raymond James. While the US has been trying to limit China’s access to the chips powering advanced AI systems, the news about DeepSeek’s chatbot making it to most-downloaded free app in the US on Apple’s App Store demonstrates the country’s rapid gains in the sector.
Our Methodology:
In order to compile a list of the 10 best stocks for beginners with little money according to hedge funds, we used a consensus of similar rankings as well as blue-chip ETFs. Moving on, we shortlisted the top 10 stocks from our list which had the highest number of hedge fund holders. The 10 best stocks for beginners with little money according to hedge funds have been arranged in ascending order of their hedge fund holders as of Q3.
At Insider Monkey we are obsessed with 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A development team working together to create the next version of Windows.
Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
The renowned technology company Microsoft Corporation (NASDAQ:MSFT) empowers people and organizations to achieve more with technology. The company has segments namely Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Microsoft sells its products through OEMs, distributors, and resellers as well as directly through digital marketplaces, online, and retail stores.
Amid the AI boom, Microsoft Corporation (NASDAQ:MSFT) serves as a leading contender among major tech giants in the AI race as a result of its partnership with the AI chatbot maker and has been investing billions to enhance its AI infrastructure. The company’s AI business is booming as reiterated by the CEO Satya Nadella on the recent FY25 Q2 earnings call:
“Already, our AI business has surpassed an annual revenue run rate of $13 billion, up 175% year-over-year”
The company has plans to spend about $80 billion on AI-enabled data centers in fiscal 2025. While Microsoft is trying to lower dependence on OpenAI and include internal and third-party AI models to power its flagship AI product Microsoft 365 Copilot, it recently rolled out DeepSeek’s AI model on the Azure cloud computing platform and GitHub tool for developers.
The stock has underperformed the Nasdaq and its mega-cap tech peers over the prior year. According to CNBC, the tech giant has seen the weakest gain among the eight U.S. tech megacap companies in the past year. The firm recorded a 10% quarterly profit growth for the FY25 Q2. Although the firm’s profits and revenue beat Wall Street expectations, Microsoft’s intelligent cloud segment’s revenue grew by 19% from last year to $25.5 billion which was lower than the consensus estimate.
Overall MSFT ranks 2nd on our list of the best stocks for beginners with little money according to hedge funds. While we acknowledge the potential of MSFT as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued 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: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.