Investment management company Vulcan Value Partners recently released its first-quarter 2025 investor letter. A copy of the letter can be downloaded here. The first quarter experienced the return of volatility. The companies’ management teams expressed a more cautious view following the recent election. Optimism has given way to uncertainty about tariffs and potential impacts on earnings, inflation, and economic growth. In the quarter, the Large Cap Composite returned -2.1% net of fees and expenses, the Small Cap Composite returned -4.5% net, the Focus Composite returned -5.8% net, the Focus Plus composite returned -6.0% and the All-Cap Composite returned -4.1% net. For more information on the fund’s best picks in 2025, please check its top five holdings.
In its first quarter 2025 investor letter, Vulcan Value Partners emphasized stocks such as Microsoft Corporation (NASDAQ:MSFT). Microsoft Corporation (NASDAQ:MSFT) is a multinational software company that develops and supports software, services, devices, and solutions. The one-month return of Microsoft Corporation (NASDAQ:MSFT) was 1.12%, and its shares lost 6.46% of their value over the last 52 weeks. On April 14, 2025, Microsoft Corporation (NASDAQ:MSFT) stock closed at $387.81 per share with a market capitalization of $2.883 trillion.
Vulcan Value Partners stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q1 2025 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) is the world’s largest software company with a broad range of offerings including Microsoft office, gaming, Azure cloud computing, LinkedIn, and more. Our estimated value for Microsoft grew at a double-digit rate over the past year. The company’s operating profits also grew at a double-digit rate. We expect the company’s value and its operating profits to continue to compound at double-digit rates. We were pleased to have the opportunity to add to our position at lower prices during the quarter.”
A development team working together to create the next version of Windows.
Microsoft Corporation (NASDAQ:MSFT) is in second position our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 317 hedge fund portfolios held Microsoft Corporation (NASDAQ:MSFT) at the end of the fourth quarter compared to 279 in the third quarter. In the fiscal second quarter of 2025, Microsoft Corporation (NASDAQ:MSFT) reported $69.6 billion in revenues, up 12% year-over-year. While we acknowledge the potential of Microsoft Corporation (NASDAQ: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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
We covered Microsoft Corporation (NASDAQ:MSFT) in another article, where we shared the list of best machine learning stocks to buy. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.