We recently compiled a list of the Jim Cramer on the Magnificent Seven Stocks Plus Netflix. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against the other magnificent stocks in Jim Cramer’s list.
On Monday, Jim Cramer, host of Mad Money, discussed the ongoing success of major technology stocks, particularly the Magnificent Seven. He noted that these companies are proving their resilience in the market, no matter the circumstances, likening their performance to having a unique “Poltergeist 2 magic.”
Cramer pointed out that this latest rally for the Magnificent Seven differs from previous ones, as it is not merely a zero-sum game where gains for one group come at the expense of another. Instead, other sectors are also thriving, likely due to the influx of capital into the market.
“Unlike previous Mag 7 rallies, this one’s definitely not a zero-sum equation where the rest of the market does nothing. Other groups can roar, too, in this market, perhaps because there’s just a lot of money going around.”
He noted that the Federal Reserve’s rate cuts mean that cash is losing value, creating an environment ripe for growth. He mentioned that the staying power of the Magnificent Seven is truly unbelievable.
“We know these stocks will once again be hit by endless worries, giving you more opportunities to buy and more weakness before they snap right back and start climbing all over again.”
Cramer highlighted that this week marks the beginning of a crucial four-week earnings season, emphasizing that these quarterly reports hold significant weight for investors and the broader stock market. He acknowledged the current climate of anxiety, especially following the market’s impressive rally. He added:
“Why stress about how quickly the Fed will cut rates, Oh? God, I’m sick of that. What matters is they’re giving vast swaths of the economy a big boost and I doubt they’ll stop anytime soon.”
Cramer also observed that investors often gravitate toward underdogs in the market, suggesting that banks could be the next promising sector. In addition to banks, Cramer also mentioned the potential in pharmaceutical stocks, suggesting that investors might want to consider major players in that sector as well.
Our Methodology
For this article, we compiled a list of stocks that were discussed by Cramer during his episode of Mad Money on October 14. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 hedge funds.
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 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
Cramer mentioned that he does not see a prominent weakness with Microsoft Corporation’s (NASDAQ:MSFT) Copilot but cited chatter around it.
“Microsoft’s supposed to be hurt by weakening demand for its Copilot, with its Copilot being their AI assistant. I have no idea if there’s a real weakness here but there is chatter and that’s enough to send the stock down. That said, I think the bears need a lot more than chatter to keep it down.”
Microsoft (NASDAQ:MSFT) has evolved beyond its origins in software, operating systems, and web browsers to become a significant player in various emerging industries. Today, it ranks as one of the largest providers of cloud infrastructure globally, which positions the company favorably to market AI products and services to its cloud clients.
In its last quarter, the company reported revenue of $64.7 billion, a 15% increase compared to the previous year. It highlighted impressive growth in its Azure Cloud services. In the quarter, Azure revenue surged by 30%. Looking forward, management expects that the results from Azure will further accelerate in the latter half of fiscal 2025, driven by substantial investments in new data center capacity that are set to come online.
Its growth is not solely limited to cloud services, Microsoft (NASDAQ:MSFT) is also experiencing significant adoption of its Copilot software, an AI-powered assistant designed to improve workplace productivity. In the fourth quarter, the number of Microsoft 365 Copilot customers increased by over 60% sequentially. With a user base exceeding 400 million for Office 365, the company remains well-positioned for continued growth in this domain.
Overall MSFT ranks 2nd on Jim Cramer’s list of magnificent stocks. While we acknowledge the potential of MSFT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an 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.
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Disclosure: None. This article is originally published at Insider Monkey.
