1. Microsoft Corporation (NASDAQ:MSFT)
Beta Value: 0.90
Dividend Yield: 0.80%
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT), one of the world’s largest tech companies, develops productivity software, cloud solutions, and personal computing products.
BMO Capital Markets reaffirmed its bullish outlook on Microsoft Corporation (NASDAQ:MSFT), maintaining an Outperform rating and a $500 price target. The firm made slight revisions to the company’s capital expenditure (CapEx) and depreciation analysis, leading to higher consolidated cost of goods sold (COGS) estimates for fiscal year 2026, with minimal impact on FY 2025. Despite a dip following its earnings report, Microsoft Corporation (NASDAQ:MSFT) forecasts revenue between $63.8 billion and $64.8 billion for the current quarter, slightly below the $65.07 billion estimate.
Additionally, Microsoft Corporation (NASDAQ:MSFT)’s latest financials highlight Azure as the fastest-growing cloud service among hyperscalers. Excluding contributions from per-user businesses like Enterprise Mobility and Security (EMS) and Power BI, Azure’s core growth hit 33% year-over-year in constant currency for FY 2024, up from the previously reported 30%. The company has revised its first-quarter FY 2025 guidance to reflect a 33% growth rate, compared to the earlier projection of 28-29%. Azure’s updated metrics suggest an annualized run rate of around $62 billion as of June 2024, excluding per-user businesses, down from an estimated $80 billion when they are included.
In the second quarter, 279 hedge funds held stakes in Microsoft Corporation (NASDAQ:MSFT), with a total value of $89.068 billion. As of June 30, the Bill & Melinda Gates Foundation Trust emerged as the largest shareholder, holding a position valued at $15.6 billion.
Baron Opportunity Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q2 2024 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) is the world’s largest software and cloud computing company. Microsoft was traditionally known for its Windows and Office products, but over the last five years it has built a $135 billion run-rate cloud business, including its Azure cloud infrastructure service and its Office 365 and Dynamics 365 cloud-delivered applications. The stock contributed to performance because of continued strong operating results and investor enthusiasm regarding Microsoft’s leadership across the secular megatrends of AI and cloud computing. Recent business momentum continued to show evidence of the strength and attractiveness of Microsoft’s product portfolio among its customer set: (1) Azure OpenAI – its suite of AI services – is now used by 65% of the Fortune 100 and contributed 7% of Azure revenue (an annualized run rate of $5.2 billion); (2) GitHub Copilot – its AI code writing service – is bending the productivity curve for developers (reports of 40%- plus improvements in developer efficiency) and now has 1.8 million paid subscribers, with growth accelerating to over 35% quarter-over-quarter; and (3) Copilot Studio – its AI application service that makes it easier for anyone to build an application, automate a workflow, or create a Copilot using natural language. 30,000 organizations across every industry have used Copilot Studio to customize Copilot for Microsoft 365 or build their own, up 175% quarter-over-quarter. In the March quarter, Microsoft again reported better-than-expected financial results, highlighted by Microsoft Cloud growing 23% year-over-year, with the fastest commercial bookings in six quarters, and Azure accelerating to 31% constant currency growth, up from 28% in the previous quarter. June quarter guidance came in-line with consensus, but the company provided higher guidance for the most important segment, Intelligent Cloud, on the back of continued strong trends across Azure and Azure OpenAI. We remain confident that Microsoft is one of the best-positioned companies across the overlapping software, cloud computing, and AI landscapes.”
While we acknowledge the potential of MSFT, 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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