We recently compiled a list of the 10 AI Stocks with Massive Growth Potential. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against the other AI stocks.
AI-darling Nvidia reported its earnings yesterday, and it’s safe to say that the numbers have been objectively great. Nevertheless, investor sentiment remains rather mixed, implying a “buy the rumor, sell the news” case.
Most of these concerns remain about sustaining the AI-driven market rally. The emergence of less power-hungry rivals such as DeepSeek also suggests uncertainty regarding the future demand for advanced chips.
READ ALSO: 10 Buzzing AI Stocks Dominating Headlines and 10 AI Stocks Gaining Momentum Right Now
Alongside, President Donald Trump noted that the 25% tariffs on Canada and Mexico are set to go into effect on March 4, adding that an additional 10% tax would be imposed on Chinese imports.
Investment firm UBS, without commenting on individual names, said that the earnings print reinforces their view that the broader AI market is big enough for every segment to grow, and that they remain positive on the AI compute industry as well as the broader AI trend. This is despite recent concerns around low-cost models like DeepSeek and recent noise around data centers, they stated.
“We maintain our positive view on AI semiconductors and leading cloud platforms, and recommend investors take advantage of elevated near-term volatility by buying the dip in quality AI stocks or through structured strategies.”
-UBS
Investors were skeptical ahead of the print considering how rival DeepSeek’s less power-hungry nature could imply an overspend by US tech giants on AI infrastructure without sufficient return in that investment. Nonetheless, AI players are continuing to announce plans to funnel tens of billions of dollars into infrastructure.
According to Wedbush analyst Dan Ives, $325 billion in capital expenditures is expected this year from just the “Magnificent Seven” tech companies. Moreover, a majority of this spend is aimed at supporting AI growth.
“We have seen NOT ONE AI enterprise deployment slow down or change due to the DeepSeek situation. No customer wants to ‘lose their place in line’ as it is described to us for Nvidias next gen chips.”
-Dan Ives
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).
A development team working together to create the next version of Windows.
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 February 27, The Wall Street Journal reported that Microsoft will be calling for President Donald Trump’s team to loosen the limits on chips used in data centers for training AI models so they no longer apply to a group of U.S. allies.
According to the report, the proposal will mention allies such as Switzerland, Israel, and India, which is going to be published in Microsoft’s blog post scheduled to release on Thursday. WSJ stated that Microsoft believes that the expanded export restrictions may lead to allies facing limited U.S. chip supply, turning to China.
Overall MSFT ranks 2nd on our list of the AI stocks with massive growth potential. 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.
READ NEXT: 20 Best AI Stock To Buy Now and Complete List of All AI Companies Under $2 Billion Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
