Mar Vista Investment Partners, LLC, an investment management company, released its “Mar Vista U.S. Quality Strategy” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. US equities experienced a strong momentum in 2025 and marked their second consecutive year of double-digit gains. The market witnessed one of the fastest recoveries following its dip into bear territory in April. Market leadership continued to narrow as Mega-cap stocks and AI-driven companies dominated the landscape. Against this backdrop, The Mar Vista’s U.S. Quality strategy reported +0.20% net-of-fees gains in Q4 2025 vs. the Russell 1000® Index’s +2.41% return and the S&P 500® Index’s +2.65% return. Stock selection in the communication services, consumer discretionary, and financials sectors was favorable to its performance, while stock selection in information technology, materials, and healthcare detracted from its performance. The letter also shared that, in 2026, markets will need to strike a balance between strong fundamentals and increasing economic uncertainties. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, Mar Vista U.S. Quality Strategy 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 -1.14%, and its shares gained 10.41% of their value over the last 52 weeks. On January 13, 2026, Microsoft Corporation (NASDAQ:MSFT) stock closed at $470.67 per share, with a market capitalization of $3.499 trillion.
Mar Vista U.S. Quality Strategy stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its fourth quarter 2025 investor letter:
“Microsoft Corporation’s (NASDAQ:MSFT) stock came under pressure in Q4 as investors grew concerned about the rising cost of building AI data infrastructure to support foundation models such as OpenAI. Capital expenditures across Microsoft and its hyperscaler peers accelerated in calendar 2025 and are expected to increase again in 2026. While these investments are substantial, Microsoft is well positioned to fund this growth through its large and expanding base of operating cash flows. That said, the company does have meaningful exposure to OpenAI, which remains relatively unproven given the scale and duration of its contractual commitments.
We continue to maintain Microsoft as a top holding, as we believe the company’s financial strength, diversified revenue streams, and broad customer base provide significant resilience. Microsoft is seeing accelerating growth within Azure, its hyperscale cloud platform which remains capacity constrained, alongside increasing adoption of its Copilot offerings across its extensive enterprise customer base. We believe Microsoft should be well positioned to generate attractive long-term returns from its partnership with OpenAI and to effectively monetize generative AI capabilities across its global enterprise IT footprint through its expanding suite of Copilot and AI-enabled products.”
Microsoft Corporation (NASDAQ:MSFT) is in the second position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 312 hedge fund portfolios held Microsoft Corporation (NASDAQ:MSFT) at the end of the third quarter compared to 294 in the previous quarter. In the first quarter of fiscal year 2026, Microsoft Corporation (NASDAQ:MSFT) reported revenue of $77.7 billion, representing an 18% and 17% when adjusted for constant currency. While we acknowledge the risk and potential of Microsoft Corporation (NASDAQ: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 Microsoft Corporation (NASDAQ: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 best fundamental stocks to buy according to analysts. In addition, please check out our hedge fund investor letters Q4 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.
