We recently published a list of 8 Best Robinhood Stocks to Buy According to Analysts. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against other best Robinhood stocks to buy according to analysts.

Morgan Stanley Wealth Management has announced quarterly retail investor pulse survey results. The majority of investors’ views were bullish. Investors began the year on the bullish (58%) note, in line with last quarter (59%). Furthermore, the results also revealed that around 2 out of 3 investors (64%) saw the market rising by the end of the quarter.

What’s On Retail Investors’ Minds?

Morgan Stanley Wealth Management’s survey revealed that inflation has been the top worry for investors’ portfolios at 45%, almost in line with the last quarter at 46%, with market volatility at 24% coming out to be the second. Notably, the concerns related to the new administration declined 13 percentage points since the last quarter. Furthermore, around 3 out of 5 (59%) of investors see that the broader US economy remains healthy. Chris Larkin, Managing Director, Head of Trading and Investing, E*TRADE from Morgan Stanley, stated that with any new administration taking power, the potential policy changes can bring uncertainty in the broader markets. That being said, investors are optimistic and resilient amid a soft start to the new year.

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

Current Trends in Retail Investing

Retail outflows from the US equities increased to ~$4 billion over the previous 2 weeks due to the uncertainties related to tariffs and increased economic concerns, which resulted in a strong pullback in the S&P 500, reported CNBC, while quoting data from Barclays. Rob Austin, director of research at Alight Solutions, says that if people tried to buy the dip, there would have been evidence hinting at the increased buying of the large-cap equities. On the contrary, people are selling large-cap equities. Austin believes that this seems to be a bit of a reactionary trading activity.

CNBC, while highlighting the comments made by Venu Krishna (Barclays head of U.S. equity strategy), reported that there remains sufficient capacity for the retail investors to further disengage from the broader equity market. Notably, Barclays’ proprietary euphoria indicator exhibited that the sentiments are down to the levels that were seen around the time of the US election back in November, but remain elevated by historic standards.  The increased sell-off came as American households remained more sensitive than ever to the significant volatility in the broader equity markets.

Our Methodology

To list the 8 Best Robinhood Stocks to Buy According to Analysts, we sifted through several online rankings to shortlist the stocks trending on Robinhood. We also took help from the Robinhood Investor Index. Next, we chose the ones that analysts see significant upside to. Finally, the stocks were arranged in ascending order of their average upside potential, as of March 17. We also mentioned the hedge fund sentiment around each stock, 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)

Average Upside Potential: ~28.6%

Number of Hedge Fund Holders: 317

Analyst Bradley Sills from Bank of America Securities reiterated a “Buy” rating on Microsoft Corporation (NASDAQ:MSFT)’s stock, keeping a price objective of $510.00. The rating is backed by its strong performance and future growth potential. As per the analyst, the expected growth in Azure, fueled by Al workloads as well as large cloud deals, hints at the favorable outlook for the coming quarters. Microsoft Corporation (NASDAQ:MSFT)’s strategic emphasis on Al, mainly via Microsoft 365 Copilot, can fuel strong revenue growth, reinforcing the company’s position as a leader in applications and infrastructure. Therefore, the analyst’s confidence in the company’s ability to capitalize on the expanding Al market aids the rating.

Elsewhere, D.A. Davidson upped Microsoft Corporation (NASDAQ:MSFT)’s stock to “Buy,” increasing the price objective to $450 from $425. The analyst highlighted a more disciplined capital expenditure strategy as well as healthy positioning among several other mega-cap technology firms. The firm’s team opines that the company has pivoted to a more rational capex strategy. Therefore, Microsoft Corporation (NASDAQ:MSFT) streamlined the capex approach, enhancing margins and return on invested capital.

Mairs & Power, an investment advisor, released the Q4 2024 investor letter. Here is what the fund said:

“Unlike the dot-com companies that operated at the turn-of-the-century, many of today’s technology companies are established businesses with significant cash flows. We have argued, and continue to argue, that many of these investments are perfectly aligned with our investments process in that they embody durable competitive advantages, above-average growth prospects, and excellent management teams.

A perfect example is Microsoft Corporation (NASDAQ:MSFT), which has grown to become the largest holding in the Growth Fund. Microsoft has a near monopoly on the office software productivity market with its Microsoft Office Suite. The company’s Azure platform is a leader in cloud computing and has been steadily gaining share. Thanks to its Office and Azure products, the company is deeply embedded within many enterprise IT ecosystems. Therefore, it should be well-positioned to expand its presence within its customer base, as it rolls out premium-price AI solutions. The company is not resting on its laurels and plans on spending an astounding $80 billion in 2025 to build out AI data centers.”

Overall, MSFT ranks 4th on our list of best Robinhood stocks to buy according to analysts. 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. 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 30 Best Stocks to Buy Now According to Billionaires

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