We recently compiled a list of the 20 Most Profitable Stocks of the Last 20 Years. In this article, we are going to take a look at where MicroStrategy Incorporated (NASDAQ:MSTR) stands against the other profitable stocks.
The stock market has a long history of generating wealth for investors. While past performance doesn’t guarantee future results, studying successful companies can provide valuable insights. By understanding the factors that drive these companies’ growth, we can potentially make better investment decisions in the future. It’s important to remember that investing involves risk, and conducting thorough research is crucial before making any investment decisions.
Investors frequently overlook revenue in favor of profitability when evaluating stocks. Profit is what’s left over after all costs are paid. Revenue is the total amount of goods and services sold. Because it is essential to determine if a business is a growth stock or a value one, profitability is important. To learn more about growth stocks, see 12 Best Growth Stocks to Buy and Hold in 2024. You can also discover some undervalued value stocks by reading 11 Oversold Value Stocks To Buy Now.
The U.S. stock market has seen several major events since 2000, including the dot-com boom and fall, the 2008 financial crisis, a tech boom with trillion-dollar values, and the 2020 pandemic crisis. The S&P’s broader market index produced double-digit yearly returns thirteen times between 2003 and 2023. This strong performance can be largely attributed to the phenomenal returns generated by technology stocks, which significantly boosted the overall return of the large-cap market.
According to a recent estimate, the aggregate market value of the top seven S&P 500 corporations is almost double that of the Japanese market. The head of topical research and global economics, Jim Reid, cautions that this is the most concentrated the US market has ever been.
As interest in growth stocks increases due to the hype surrounding AI and the prospect of rate cuts, these companies’ fortunes are expected to soar. To satisfy market demand, businesses are making significant investments in AI. AI’s impact on altering work patterns was highlighted by Satya Nadella du. According to them,:
“A growing body of evidence makes clear the role AI will play in transforming work. Our own research, as well as external studies, show as much as 70% improvement in productivity, using generative AI for specific work tasks.”
Our Methodology
To identify the most profitable stocks, we looked at the 20-year annualized returns of publicly traded companies in the US market from 2004 to 2024 and selected and ranked those with the highest 20-year annualized returns.
A software engineer wearing a headset, collaborating with a remote team on a project.
MicroStrategy Incorporated (NASDAQ:MSTR)
20-Year Annualized Return: 19.09%
MicroStrategy Incorporated (NASDAQ:MSTR) is a provider of artificial intelligence-powered enterprise analytics software and services, serving global markets including the United States, Europe, the Middle East, Africa, and beyond.
MicroStrategy reported a decline in total revenues for Q1 2024, down 5.5% year-over-year to $115.2 million, primarily attributed to decreases in product support and other services revenues. The company incurred a net loss of $53.1 million, or $3.09 per share, contrasting sharply with a $461.2 million net income in Q1 2023, due to significant impairment charges on digital assets, specifically bitcoin. Despite these challenges, MicroStrategy saw notable growth in its Subscription Services segment, which increased by 22% year-over-year to $23.0 million.
MicroStrategy Incorporated (NASDAQ:MSTR) introduced several enhancements to its AI capabilities, including improvements to its MicroStrategy Auto Bot. The company also made its AI features available in MicroStrategy Cloud for Government (MCG), catering to FedRAMP-authorized customers
In Q1 2024, there were 22 hedge fund holders in the company, up from 16 from the previous quarter. The hedge fund that held the largest shares was Citadel Investment Group with 1,577,700 shares worth $2,689,284,312. MicroStrategy stock is rated as “Strong Buy” by six analysts, who have set a 12-month price target averaging $2,018, with range from 1,800 to 2,890. This suggests a potential increase of 54.96% from its current price of $1,302.09.
Overall MSTR ranks 18th on our list of the most profitable stocks of the last 20 years. You can visit 20 Most Profitable Stocks of the Last 20 Years to see the other profitable stocks that are on hedge funds’ radar. While we acknowledge the potential of MSTR 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 more promising than MSTR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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