Jim Cramer Calls Market Decline ‘Man-Made’ and Breaks Down 15 Stocks

9. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 317

Jim Cramer included Microsoft Corporation (NASDAQ:MSFT) in his top tier of the Magnificent Seven, citing its durable business and essential software offerings. However, he expressed concern about Microsoft’s AI execution and recent forecast downgrades.

“Microsoft has one of the most durable businesses in the group. Its core office software remains essential in the workplace and its large cloud business adds to the company’s overall growth. That’s why Microsoft’s only down about 24% from its highs, best performance of the group.

But on the negative side the company seems to be a bit lost in this AI front. That co-pilot AI tool; I’m calling it somewhat of a bus. And its weird slow motion break up with Open AI, what’s that about? But at 25; 27 times this year’s earnings I think you can justify picking some Microsoft up here again.”

Alger Spectra Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q4 2024 investor letter:

“Microsoft 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, Microsoft delivered better-than-expected fiscal first-quarter revenues, beating analyst estimates across all three segments. In the Intelligent Cloud business, Azure revenue grew 34% yearover-year, slightly above consensus, with AI Services contributing 12% to Azure’s growth, up from 11% in the previous quarter, as demand for AI continues to outpace capacity. However, shares declined after management signaled a potential deceleration in Azure growth for the next quarter and highlighted a negative earnings impact from OpenAI-related losses.

Additionally, concerns over significantly increased AI-related capital expenditures (CapEx) raised questions about short-term profitability despite the long-term growth potential. While these near-term challenges led to shares detracting from performance for the quarter, we remain confident in Microsoft’s ability to maintain its leadership in AI.”