We recently published a list of 10 Best Stocks to Buy and Hold for 20 Years. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against other best stocks to buy and hold for 20 years.

As per Ameriprise Financials, the initial months of 2025 were tough for investors. This is because leading US stock indexes ended the first quarter meaningfully lower, countering the investor projections that stocks will continue to move northwards after the 2 strong years of returns. Notably, the tariff uncertainty has impacted the markets this year, while recession odds are increasing, and global trade frictions continue to increase.  Since major market areas have corrected from the recent highs, and the outlook has become guarded, the investment firm believes that maintaining a balanced perspective of current conditions remains important during periods of market stress.

What Lies Ahead in Q2 2025?

Ameriprise Financial opines that Q2 2025 is expected to bring as much uncertainty and volatility for investors as Q1 2025. That being said, the investment firm believes that the bullish case for stocks is expected to prevail long term, considering the current firm US economic and profit conditions. However, the threat of Trump’s tariff policies and the possible retaliatory tariffs can change the broader market dynamics.

Nevertheless, the investors should not deviate from the well-diversified portfolio. As per Ameriprise Financial, the investors are required to focus on holding high-quality assets throughout their portfolio, make sure that their allocations are in line with their risk tolerance, and that they take a longer-term view of the current market stress, which, historically, can result in opportunities to dollar-cost average in the high-quality assets.

READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.

What Could Support Equities?

As per Ameriprise Financial, if a recession is avoided, considering the recent tariff dynamics, the current stock levels can provide attractive entry points for investors who plan to dollar-cost average in the volatility. Furthermore, the US economy and S&P 500 Index corporate profits are projected to grow, says the firm. While it remains difficult to project where the economy and corporate profits can move over the near-to-intermediate term as a result of current tariff policies, the US economy and corporate earnings are expected to remain positive in H1 2025, says Ameriprise Financial.

The corporate profit margins are at strong levels relative to history, which can support companies in navigating tariff worries and stabilize demand and profits, especially if these tariff impacts are temporary. On average, when the sentiment is significantly weak and there is increased uncertainty about policy, some clarity emerges. And with this, the stock performance tends to improve over the upcoming 6 to 12 months, says the investment management firm.

Our Methodology

To list the 10 Best Stocks to Buy and Hold for 20 Years, we sifted through several financial media reports to choose well-established and stable companies. After getting an extended list of the stocks, we shortlisted the ones that were the most popular among hedge funds, as of Q4 2024.

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

Analyst Keith Weiss from Morgan Stanley maintained a “Buy” rating on Microsoft Corporation (NASDAQ:MSFT)’s stock and gave the price objective of $472.00.  The analyst’s rating is backed by a combination of factors demonstrating the company’s long-term potential amidst current challenges. The company’s valuation demonstrates a positive risk-reward balance for investors focusing on long-term prospects, mainly in the era of GenAI, where Microsoft Corporation (NASDAQ:MSFT) is regarded as a leader. Elsewhere, analyst Mark Murphy from J.P. Morgan maintained a “Buy” rating on the company’s stock.

The rating was backed by a combination of factors demonstrating Microsoft Corporation (NASDAQ:MSFT)’s strategic positioning and growth potential. One of the critical reasons is its significant advancements in the security offerings. As per the analyst, such developments remain critical as they address the increasing worries related to the IT landscape, mainly in the context of AI, and also enhance Microsoft Corporation (NASDAQ:MSFT)’s capability to provide comprehensive security solutions throughout multi-cloud environments. Morningstar assigned a wide economic moat rating, which stems from the switching costs. Notably, the network effects and cost advantages have been tagged as secondary moat sources. The firm expects that Microsoft Corporation (NASDAQ:MSFT) is expected to earn returns in excess of its cost of capital over the upcoming 20 years. The company’s AI initiatives can create new revenue streams and improve the existing products throughout its portfolio, supporting its growth trajectory for the decades to come.

Fred Alger Management, an investment management company, released its Q1 2025 investor letter. Here is what the fund said:

“Microsoft Corporation (NASDAQ:MSFT) is a beneficiary of corporate America’s transformative digitization. The company operates through three segments: Productivity and Business Processes (Office365, LinkedIn, and Dynamics), Intelligent Cloud (Server Products and Cloud Services, Azure, and Enterprise Services), and More Personal Computing (Windows, Devices, Gaming, and Search). During the quarter, shares detracted from performance as Azure revenue growth missed analyst estimates, marking the third consecutive quarter of modest disappointment in this segment. However, AI-related sales growth exceeded expectations, accounting for 13% of Azure’s quarterly growth. Management also maintained their fiscal third quarter earnings guidance while highlighting improved operating profitability and lower tax rates. Despite the disappointing quarter, we remain confident in Microsoft’s ability to sustain its leadership position in AI.”

Overall, MSFT ranks 2nd on our list of best stocks to buy and hold for 20 years. 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 time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. 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 this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.