Here’s Why Microsoft (MSFT) Declined in Q1

Columbia Threadneedle Investments, an investment management company, released its “Columbia Threadneedle Global Technology Growth Strategy” first-quarter 2025 investor letter. A copy of the letter can be downloaded here. The first quarter of 2025 was challenging for U.S. equities, marked by substantial policy shifts from the new U.S. administration, resulting in declines across all major U.S. indices.  In the quarter, the fund returned -12.26% compared to the S&P Global 1200 Information Technology Index-net’s -11.64%. Security selection drove the fund’s performance relative to the benchmark. In addition, you can check the fund’s top 5 holdings for its best picks for 2025.

In its first-quarter 2025 investor letter, Columbia Threadneedle Global Technology Growth 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 3.97%, and its shares gained 6.77% of their value over the last 52 weeks. On June 10, 2025, Microsoft Corporation (NASDAQ:MSFT) stock closed at $470.92 per share, with a market capitalization of $3.514 trillion.

Columbia Threadneedle Global Technology Growth Strategy stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q1 2025 investor letter:

“Microsoft Corporation (NASDAQ:MSFT) declined in value during the quarter as results from the company’s all important cloud business reported slightly mixed expectations, although this was attributed to supply chain constraints. Market speculation that Microsoft was cutting back on building out data center capacity raised concerns about the future of AI spending and heightened broader market skepticism about the sustainability of the recent AI boom that has driven technology stocks higher.”

Jim Cramer Calls Microsoft’s (MSFT) Latest Quarter a “Great One”

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 potential of Microsoft Corporation (NASDAQ:MSFT) 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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Microsoft Corporation (NASDAQ:MSFT) and shared the list of best wide moat stocks to buy. RiverPark Large Growth Fund’s Q1 2025 investor letter noted that Microsoft Corporation (NASDAQ:MSFT) is a key driver of digital transformation with strong long-term potential. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

Disclosure: None. This article is originally published at Insider Monkey.