We recently published a list of 11 AI Stocks On Wall Street’s Radar. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against other AI stocks on Wall Street’s radar.
US President Donald Trump is all set to revive the country’s struggling coal industry. Last month, he signed a series of executive orders so that the government could meet the surging energy demand of AI data centers. Executive Order 14241 will allow several older coal-fired plants about to retire to continue generating power for the foreseeable future. This will be done to meet the growing demand for artificial intelligence.
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Repeatedly promoting coal as a power source for data centers, Trump told the World Economic Forum in January that he would be approving power plants for AI through an emergency declaration. He also called on tech companies to use coal as a backup power source.
“They can fuel it with anything they want, and they may have coal as a backup — good, clean coal.”
However, with the tech industry investing billions of dollars to expand renewable energy and leveraging nuclear power as a way to meet its growing electricity demand, the use of coal is actually against the tech companies’ environmental goals.
Nevertheless, the tech industry does acknowledge that fossil fuel generation will eventually be needed to help navigate the electricity demand from AI. However, these companies are focusing on natural gas as it emits less half the CO2 of coal per kilowatt hour of power.
“To have the energy we need for the grid, it’s going to take an all of the above approach for a period of time. We’re not surprised by the fact that we’re going to need to add some thermal generation to meet the needs in the short term.”
-Kevin Miller, Amazon’s vice president of global data centers.
Other companies, such as Anthropic, have stated that there are a broader set of options available than just coal. “
We would certainly consider it but I don’t know if I’d say it’s at the top of our list.”
-Anthropic co-founder Jack Clark
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds. The hedge fund data is as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A development team working together to create the next version of Windows.
Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 317
Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements. On May 19, the company kicked off its annual developer “Build” conference in Seattle, bringing together thousands of coders looking to turn AI investments into profitable products and services for consumers and businesses. Ahead of the conference, Microsoft’s Technology Officer Kevin Scott said that the company visualizes a future where artificial intelligence agents from different firms can work together and have better memories of their interactions.
Scott noted that Microsoft is backing a technology called Model Context Protocol (MCP). The MCP is an open-source protocol introduced by Google-backed Anthropic, having the ability to create an “agentic web” similar to the way hypertext protocols helped spread the internet in the 1990s.
“It means that your imagination gets to drive what the agentic web becomes, not just a handful of companies that happen to see some of these problems first.”
As reported by Reuters, Microsoft is also looking to shift its partnership with OpenAI. Having already spent $64 billion this year, largely on data centers, it is seeking to become a neutral arms dealer in the AI race.
Overall, MSFT ranks 1st on our list of AI stocks on Wall Street’s radar. While we acknowledge the potential of MSFT as an investment, 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 this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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