1. Microsoft Corporation (NASDAQ:MSFT)
No of HFs: 234
Total Value of HF Holdings: $42.1 Billion
The top quantum computing stock to buy now is MSFT. The top hedge fund holder of this stock is Stephen J. Errico’s Locust Wood Capital Advisers’ which had $51 million invested in the stock at the end of December. MSFT was mentioned as one of the 10 Best Software Stocks to Buy Now. RiverPark Advisors mentioned in their Q2 2019 investor letter that MSFT remains a top five position.
“Microsoft: Microsoft shares were our next top contributor driven by the company’s solid fiscal third quarter results, as well as the strong rebound in technology shares during the month (especially for those firms, like MSFT, that are not currently targets of antitrust investigations ). For its fiscal third quarter (ending March), MSFT’s Commercial Cloud revenue grew 41% yearover-year to $10 billion, generating more than 30% of Microsoft’s total revenue. The company’s two other segments, Productivity and Business Processes and More Personal Computing, grew a combined 14% as overall company revenue grew 16% and Non-GAAP EPS grew 20%.
Microsoft has, we believe, entered a second chapter of market-leading growth that will drive the company’s revenue and profits for years to come. Microsoft’s Cloud Infrastructure offering is in the fastest growing segment of the cloud services market (including software-as-a-service (SaaS)), a market that is characterized by recurring revenues, strong pricing, high levels of customer engagement and high margins. The overall Infrastructure-as-a-Service (IaaS) industry is growing more than 30% per year and is forecast to reach $100 billion of revenues by 2021. We believe that cloud-based services can become the company’s largest revenue and earnings producer and expect Microsoft to generate significant and growing free cash flow ($11 billion last quarter, up 19% year-over-year). The company should deliver at least mid-to-high teens EPS growth, with upside from deploying its $134 billion cash balance ($7 billion was returned to shareholders in the quarter through dividends and share buybacks). We trimmed our position on strength, and Microsoft remains a top five position in in the Fund.”
Please also see 10 Best Artificial Intelligence Stocks To Buy Now and 15 Best Blue Chip Stocks to Buy Now.
By the way, you might have noticed that IBM didn’t make our list of the best quantum computing stocks to buy now because hedge funds are quite bearish on IBM’s other businesses. Short seller Jim Chanos publicly bashed the stock recently. We believe IBM definitely deserves a closer look because if hedge funds are wrong about it and its investments in emerging technologies start to pay off, IBM can return 10x over the next 10 years.
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Disclosure: None.
