5 Most Profitable Software Stocks to Buy Right Now

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1. Microsoft Corporation (NASDAQ:MSFT)

Net Income (TTM): $125.22 billion

Number of Hedge Fund holdings: 282

As of June 30, Microsoft Corporation (NASDAQ:MSFT) stock has declined by approximately 19% in June. As highlighted by The Business Times on June 29, the company’s shares are entering their worst month since the dot-com era. This is due to investors’ concerns about the company’s position in the AI-driven landscape.

“Microsoft is getting hit on two sides with worries about both AI spending and AI disruption,” stated Jack Ablin, the Chief Investment Strategist at Cresset Wealth Advisors. “While it looks like a pretty good deal with the valuation so low, I’m getting the sense that investors are shooting first and asking questions later.”

What’s even more alarming is the company’s capex projections, as Microsoft Corporation (NASDAQ:MSFT) forecasts US$190 billion in capex through the end of December. This is higher than the Street’s estimates. The company’s strong profit margin of 39.34% positions it as one of the most profitable software stocks to buy right now.

Earlier, on June 25, Stifel trimmed the company’s price target to $400, noting that Street FY27 gross margin estimates are on the high end. The firm noted the company’s mid-to-upper single-digit guidance for operating expense growth “given ongoing R&D investments.”

Microsoft Corporation (NASDAQ:MSFT) is a Washington-based company operating through Productivity and Business Processes, Intelligent Cloud, and Personal Computing segments. Founded in 1975, the company provides software, services, devices, and solutions worldwide.

While we acknowledge the potential of MSFT to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than MSFT and that has 100x upside potential, check out our report about the cheapest AI stock.

READ NEXT: Starter Stock Portfolio: 14 Safe Stocks to Buy Now and 40 Most Popular Stocks Among Hedge Funds Heading Into 2026.

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