1. Microsoft Corp (NASDAQ:MSFT)
Number of Hedge Fund Investors: 279
Dan Niles from Niles Investment said in a latest program on CNBC that Microsoft’s results showed the company’s Cloud business has “done well.”
“Microsoft Corp (NASDAQ:MSFT)—remember, this is the first time in the last four quarters that Azure, which is their cloud business, has actually done well. It disappointed the prior three quarters, and their Azure growth actually accelerated from 31% to 33% growth year-over-year. You look at Google Cloud or you look at Amazon Web Services—their growth actually decelerated by 2% each. And Microsoft Corp (NASDAQ:MSFT) this year is actually getting their spending under control, and I think there’s a reason why this is the best performer out of the Mag 7 so far this year. Last year, they were the biggest spender and ramped it up the fastest. There’s a reason they were the worst performer of the Mag 7 last year. So I think that one’s interesting.”
Mar Vista U.S. Quality Select Strategy stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q1 2025 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) reported strong bookings, highlighted by an accelerating remaining performance obligation of nearly $300 billion, representing 36% year-over-year growth, as well as healthy cloud revenue growth of 21% year-over-year. Despite this solid performance, MSFT stock came under pressure as Azure revenue growth, at 31% year-over-year, came in at the low end of expectations. Additionally, guidance for the March quarter forecasted Azure revenue growth of 31% to 32%, reflecting a slowdown in non-AI related Azure growth.
We continue to believe Microsoft is well-positioned to gain market share as organizations of all sizes pivot toward a digital-first future and adopt generative AI solutions. With a strong presence in the enterprise and a comprehensive portfolio spanning infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), and software-as-a-service (SaaS), Microsoft is a mission-critical IT provider across industries.
The company is executing effectively against a significant market opportunity by delivering a roadmap for digital transformation and the adoption of innovative AI tools like ChatGPT. This helps businesses boost productivity while reducing costs. Consequently, we expect Microsoft’s solutions to remain resilient even in a challenging macroeconomic environment, supporting low double-digit intrinsic value growth over our investment horizon.”
While we acknowledge the potential of Microsoft Corp (NASDAQ:MSFT) our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. 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 this cheapest AI stock.
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