Top 10 AI Stocks That Should Be On Your Watchlist for 2025

2. Microsoft Corp (NASDAQ:MSFT)

Number of Hedge Fund Investors: 279

Francisco Bido, Senior Vice President and Senior Portfolio Manager at F/m Acceleration, LLC, said in a recent program on Schwab Network that Microsoft Corp (NASDAQ:MSFT) needs a catalyst for further growth.

“Microsoft Corp (NASDAQ:MSFT) is a little bit, in my opinion, a little bit of a—they have a disadvantage. They have to come up with some kind of catalyst. I know that they have Co-Pilot, and they invest heavily in ChatGPT and so on, but they need to come up with something that really adds value to their line.

You know, I’ve heard, for example, of some overlay that they do on their software products. For example, if you’re working on a spreadsheet, it’ll do an overlay and indicate with little pointers and arrows what to do, perhaps do a formula that you never tried before—things of that nature. They have to figure out how to monetize that and add to their top line.

If they do that, maybe, you know, that’s a little bit of a catalyst. They’re a little bit, in terms of their price valuation, a little bit close to fairly priced.”

RiverPark Large Growth Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q3 2024 investor letter:

“Microsoft Corporation (NASDAQ:MSFT): MSFT was a top detractor in the third quarter following a fiscal fourth quarter earnings report that featured inline operating metrics but mixed guidance. Positively, the company reported strong revenue (+15%) and earnings growth (+10%), powered by Azure (+30%), and operating margins of 43%. Guidance however calls for lower than expected fiscal first quarter Azure revenue as infrastructure constraints limit growth, and higher capital expenditures throughout the company’s fiscal 2025 to alleviate these constraints. The company expects growth to reaccelerate in the back half of fiscal 2025 as more AI capacity comes online.

Cloud-based services have become the company’s largest revenue and earnings producer. The company’s Azure platform alone has the potential to grow to more than $200 billion in annual revenue over the next decade. Overall, we believe that the company will continue to deliver double-digit revenue and EPS growth and generate an enormous amount of free cash flow to return to shareholders and use for acquisitions.”