We recently compiled a list of the Billionaire Israel Englander’s Top 10 Stock Picks Heading Into 2025. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against the other stock picks.
Israel Englander has always inspired the investment world by founding and managing the second-most profitable hedge fund in history. The Brooklyn-born billionaire investor began his career on Wall Street in 1970. After gaining valuable experience in trading and investment management, he founded Millennium Management in 1989.
Millennium Management has become one of the world’s largest and most successful hedge funds, managing $210 billion in 13F securities as of Q3 2024. Innovative investment strategies and a focus on risk management are the tenets that have propelled the hedge fund to tremendous success. Since its inception, Englander’s hedge fund has averaged 14% in annual returns, solidifying its position in the highly competitive hedge fund landscape. The hedge fund has also racked up over $56 billion in cumulative profits for investors since its inception.
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Millennium Management had its best year in 2000, when the dot-com bust started, and the S&P 500 was down 10%. Thanks to its multi-strategy approach, it returned 35%, which consistently produces positive returns. As the CEO, Englander only had one down year, a 3% decline at the height of the financial crisis in 2008. The impressive performance stems from the billionaire investor focusing on unique investment strategies emphasizing diversification and risk management. Likewise, Englander advocates for a multi-strategy approach that makes it easy to capitalize on various market opportunities.
Millennium Management’s diversification strategy was highlighted when they sold tech stocks to invest in an index fund, emphasizing long-term growth and risk mitigation. Israel Englander remains focused on expanding the firm and leveraging technology to stay competitive.
In 2023, Israel Englander topped Bloomberg’s list of highest-earning hedge fund managers with $2.8 billion in net earnings. Millennium Management earned $600 million from commodities last year but lagged behind Citadel’s $8 billion in 2022. Bloomberg cited sources saying Millennium’s struggles are due to Englander’s tight control. Financial Times reported Millennium manages $60 billion in assets, employs 5,400 people, and has 17 offices. The fund returned 8.3% in 2023, 12.5% in 2022, 13.6% in 2021, and 25.9% in 2020.
Millennium Management was one of the hedge funds that benefited from the overall stock market rally, with the S&P 500 gaining 24% in 2024 due to optimism around artificial intelligence and interest rate cuts. The hedge fund also benefited from its exposure to many of the ‘Magnificent 7’ stocks, which were behind much of the actions in 2024.
After two straight years of annual gains, the focus in the equity markets is on stocks that can maintain the upward momentum in 2025. Billionaire Israel Englander’s top stock picks are well poised to benefit from a strong US economy. While the billionaire investor’s portfolio consists of tech stocks, it also consists of investment plays in healthcare, industrials and materials sectors. With that, let’s take a look at some of his top stock picks.
Our Methodology
We analyzed Millennium Management’s portfolio to make a list of billionaire Israel Englander’s top 10 stock picks heading into 2025. We then settled on Englander’s top ten holdings and analyzed them to determine why they stand out in generating long-term value. We then ranked these companies in ascending order based on the hedge fund’s stake value.
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)
Millennium Management’s Stake Value: $1.978 Billion
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is a tech giant and a leading software, services and solutions developer. It is one of the billionaire Israel Englanders’ top stock picks owing to its role in the digital and artificial intelligence revolution. While the stock was up by about 15% in 2024, it underperformed the overall market, given that the S&P 500 was up by about 24%.
Nevertheless, Microsoft Corporation (NASDAQ:MSFT) is one of the stocks well poised to outperform in the long term as it continues to bet big on artificial intelligence. The company has already made about $14 billion in AI investments in OpenAI, consequently gaining access to key technologies that it can use to enhance its search engine, Bing and cloud computing unit Azure.
Given that the yearly revenue run rate for Microsoft’s AI business is predicted to surpass $10 billion in its fiscal 2025 second quarter, its success in monetizing these AI advancements is clear. Enterprise AI products from the company, primarily Copilots, have emerged as significant new sources of income.
Additionally, Microsoft Corporation (NASDAQ:MSFT) is a big player in the burgeoning cloud computing sector, with about 25% market share. In the first quarter of fiscal 2025, its revenues increased by a remarkable 33% year over year. With data centers spread across more than 60 countries and Azure OpenAI’s capabilities growing quickly, Microsoft is well-positioned for sustained growth.
RiverPark Large Growth Fund expects continued double-digit revenue and EPS growth for Microsoft Corporation (NASDAQ:MSFT) according to its Q3 2024 investor letter:
“Microsoft Corporation (NASDAQ:MSFT): MSFT was a top detractor in the third quarter following a fiscal fourth quarter earnings report that featured inline operating metrics but mixed guidance. Positively, the company reported strong revenue (+15%) and earnings growth (+10%), powered by Azure (+30%), and operating margins of 43%. Guidance however calls for lower than expected fiscal first quarter Azure revenue as infrastructure constraints limit growth, and higher capital expenditures throughout the company’s fiscal 2025 to alleviate these constraints. The company expects growth to reaccelerate in the back half of fiscal 2025 as more AI capacity comes online.
Cloud-based services have become the company’s largest revenue and earnings producer. The company’s Azure platform alone has the potential to grow to more than $200 billion in annual revenue over the next decade. Overall, we believe that the company will continue to deliver double-digit revenue and EPS growth and generate an enormous amount of free cash flow to return to shareholders and use for acquisitions.”
Overall MSFT ranks 1st on our list of Billionaire Israel Englander’s top stock picks heading into 2025. 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 the ones mentioned on our list 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.