We recently published a list of the Top 10 AI Stocks on Investors’ Radar. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against other AI stocks that are on investors’ radar.
China’s artificial intelligence sector is evolving into a fiercely contested arena. It hasn’t been long since artificial intelligence startup DeepSeek introduced its low-cost yet efficient AI models, shaking up the tech world. Ever since, several other companies have joined in, intensifying the race. In the latest news, Chinese tech giant Tencent has launched the official version of its T1 reasoning model, marking a step forward in the nation’s accelerating AI push.
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According to The South China Morning Post, the new artificial intelligence (AI) reasoning model, Hunyuan T1, rivals DeepSeek’s R1 in performance and pricing. Tencent’s model leverages large-scale reinforcement learning, a technique which has also been employed by DeepSeek in its R1 reasoning model. According to the company, the upgraded T1 model features faster response times and improved capabilities for handling extended text documents.
T1 can “keep the content logic clear and the text neat and clean”, the post said, while the hallucination rate is “extremely low”.
The T1 has been officially released after the beta run of the T1 preview on Tencent’s chatbot Yuanbao. It scored 87.2 points on the Massive Multitask Language Understanding (MMLU) Pro benchmark, a test that thoroughly assesses large language models’ language comprehension and reasoning across diverse domains. The score beat DeepSeek-R1’s 84 points but trailed the 89.3 points achieved by OpenAI’s o1, according to South China Morning Post’s report.
Tencent has claimed to be the first in the industry to adopt a hybrid architecture combining Google’s Transformer and Mamba. This architecture has been developed by Carnegie Mellon University and Princeton University. According to the company, the hybrid approach “significantly reduces training and inference costs” by cutting memory usage.
The company further praised T1 as “significantly reducing resource consumption while ensuring the ability to capture long text information”. T1 offers a 200 percent increase in decoding speed.
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds. The hedge fund data is 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).
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Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 317
Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements. On March 20, Tigress Financial analyst Ivan Feinseth reiterated their “Buy” rating on the stock and raised the price target to $595 from $550. Feinseth is optimistic about Microsoft’s strategic position in the market, with its ongoing development and integration of AI technologies anticipated to boost significant growth across its business lines.
Furthermore, the company’s leadership in AI is highlighted through the incorporation of ChatGPT into its products, positioning it at the forefront of digital transformation. Microsoft is also financially strong, as evident from its strong balance sheet and cash flow. This allows it to support its growth initiatives and strategic acquisitions, which further boost shareholder returns via dividends and share repurchases. The analyst asserted that their raised target represents a potential return with dividends of over 25% from current levels.
Overall, MSFT ranks 1st on our list of AI stocks that are on investors’ radar. While we acknowledge the potential of MSFT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. 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.