Analyzing Microsoft Corporation’s (MSFT) Strategic Journey in AI Revolution

Longriver Investment Partners released its “Longriver Partners Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the quarter, the fund returned 11.7% (net), bringing the year-to-date return to 11.4%. This compares to the benchmark, the MSCI AC World USD Net Index, which returned 11.5% for the quarter and 10.0% year-to-date. The Fund has gained 55.6%, compared to 58.0% for the benchmark, since inception. The investment strategy focuses on harnessing the long-term value created by the holding companies. The fund primarily invests in big tech companies known for consistent performance and have built-in opportunities for profit reinvestment. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its second quarter 2025 investor letter, Longriver Partners Fund highlighted 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 5.15%, and its shares gained 10.73% of their value over the last 52 weeks. On July 9, 2025, Microsoft Corporation (NASDAQ:MSFT) stock closed at $503.51 per share, with a market capitalization of $3.742 trillion.

Longriver Partners Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its second quarter 2025 investor letter:

“AI has reshuffled the market for cloud computing. Thanks to its early and exclusive partnership with OpenAI, Microsoft Corporation (NASDAQ:MSFT) has become the default host for AI-native workloads. Every Copilot prompt runs on Azure, and so does every OpenAI API call, even when users never touch a Microsoft front-end.

But the partnership is under strain. OpenAI is pushing its own APIs and enterprise stack. Microsoft wants to be the infrastructure layer for everyone. “They’re almost competing now,” said one expert, “Microsoft resells GPT. OpenAI is steering people to its own enterprise stack.” For now, most usage still benefits Azure, but the lines are blurring.”

Microsoft Corporation (MSFT) Could Finally Benefit From A Major Catalyst, Says Jim Cramer

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, 284 hedge fund portfolios held Microsoft Corporation (NASDAQ:MSFT) at the end of the first quarter compared to 317 in the previous quarter. In the fiscal third quarter of 2025, Microsoft Corporation (NASDAQ:MSFT) reported $70.1 billion in revenues, up 13% year-over-year. While we acknowledge the risk and potential of MSFT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MSFT and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Microsoft Corporation (NASDAQ:MSFT) and shared the list of stocks Jim Cramer recently discussed. In addition, please check out our hedge fund investor letters Q2 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.