We recently published a list of 12 Best QQQ Stocks to Invest in Now. In this article, we are going to take a look at where Microsoft Corp. (NASDAQ:MSFT) stands against other best QQQ stocks to invest in now.

Lunch’ to analyze the market’s reaction to the tariff announcements. McCartney referred to the situation as tariff policy ping pong, and highlighted how it adds to the uncertainty in Washington during a time when weak data is emerging from other areas. She explained that this has created a perfect storm of challenges, which includes seasonal pressures that make this time of year difficult. Retail buyers have stepped away from the market, and there is uncertainty for individuals regarding tax policy and for corporations concerning tariffs and taxes. The withdrawal of overleveraged bids has contributed to increased market volatility, which makes it harder for major tech companies to maintain their leadership roles.

The conversation then turned to the influence of key sectors, particularly the MAG7. McCartney noted that when these sectors underperform, they can generate downside pressure on the market, which contrasts with the desire for a broader market trade. She pointed out that while these tech stocks are down year-to-date, the overall market remains materially up and is annualizing at a high single-digit rate. She expressed optimism about market breadth and suggested that this could present a buying opportunity for investors to re-enter big tech.

Tech stocks face short-term volatility due to market uncertainty, but their long-term potential remains intact.

Methodology

We sifted through the Invesco QQQ exchange-traded fund (ETF) holdings to find 12 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.

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).

 Microsoft Corp. (NASDAQ:MSFT)

Number of Hedge Fund Holders: 317

Microsoft Corp. (NASDAQ:MSFT) is a global technology leader that provides software, services, and hardware solutions. It operates through its Productivity and Business Processes, Intelligent Cloud, and More Personal Computing segments. It offers products like Microsoft 365, Azure, Windows, and Xbox.

On March 10, UBS analyst Karl Kierstead reaffirmed a Buy rating on the company with a $510.00 price target. He attributed the recent performance dip to a slowdown in Azure growth excluding AI, despite the company’s explanation of planned go-to-market changes for mid-2024. The analyst noted that the lack of clarity surrounding the cause and resolution timeline is negatively affecting investor confidence.

As of FQ2 2025, the company’s AI revenue hit a $13 billion annual run rate, which was up 175% year-over-year. Azure AI services alone grew 157%, which contributed 13 points to Azure’s overall growth. Over 200,000 monthly users are already on Azure AI Foundry, and Azure OpenAI app usage doubled.  Azure cloud revenue grew 31%. Microsoft Corp. (NASDAQ:MSFT) expects 31-32% Azure growth in the next quarter. It’s investing heavily in AI infrastructure and expects to meet near-term AI demand by the end of FY25.

The company is well-positioned for AI-driven growth, which is evidenced by its large planned investment in data centers and its leading market positions in office software and cloud computing. Mairs & Power Growth Fund stated the following regarding Microsoft Corp. (NASDAQ:MSFT) in its Q4 2024 investor letter:

“Unlike the dot-com companies that operated at the turn-of-the-century, many of today’s technology companies are established businesses with significant cash flows. We have argued, and continue to argue, that many of these investments are perfectly aligned with our investments process in that they embody durable competitive advantages, above-average growth prospects, and excellent management teams.

A perfect example is Microsoft Corporation (NASDAQ:MSFT), which has grown to become the largest holding in the Growth Fund. Microsoft has a near monopoly on the office software productivity market with its Microsoft Office Suite. The company’s Azure platform is a leader in cloud computing and has been steadily gaining share. Thanks to its Office and Azure products, the company is deeply embedded within many enterprise IT ecosystems. Therefore, it should be well-positioned to expand its presence within its customer base, as it rolls out premium-price AI solutions. The company is not resting on its laurels and plans on spending an astounding $80 billion in 2025 to build out AI data centers.”

Overall, MSFT ranks 2nd on our list of best QQQ stocks to invest in now. While we acknowledge the growth potential of MSFT, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires

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