We recently published a list of 12 Most Buzzing Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against other most buzzing stocks to buy according to hedge funds.

Economist Expects Prices to Rise in 2025

Data for the gross domestic product (GDP) in the fourth quarter of 2024 came out at 2.3%, slightly under economist expectations of 2.6%. On January 31, Lauren Saidel-Baker, an economist at ITR Economics, appeared in an interview on Yahoo Finance to share her outlook on the economy ahead of 2025.

Baker suggested that the economy is growing slower, which is rather a normalization of the economy and, therefore a very normal circumstance. She added that the economy is still feeling the ripple effects of the pandemic and we are now finally seeing the economy getting back to its “feat.” Baker also shared her optimistic approach towards the economy suggesting that the fundamentals point towards stable economic growth. She added that most of the growth has been driven by the consumer, meaning that the average consumer in the United States is strong and has showcased resilience.

On the flip side, the economist did share concern over government spending, exceeding its means, which has been a “long-going problem” in her opinion. Baker also shed light that government spending beyond its means may spiral in the very near term, especially with relatively higher interest rates pushing a much larger debt burden.

She highlighted that it is very important for individuals to read the economy through the noise. She added that the market has heard a lot of noise about the impending tariffs and the supposed growers and shrinkers of the economy, which she believes risk higher inflation rather than economic growth. She emphasized that there is no optimal number at which the economy is supposed to grow, and the economy is likely expected to operate in waves.

Baker believes that the economy may grow between 2-3% by the end of the year, and expects to see a slight acceleration by 2026. She also added that while the consumer is feeling higher prices, the general trend is in fact “disinflation,” which means a positive rate of inflation but slightly lower. She explained that while the consumer is bearing the brunt of higher prices, the prices are not rising fast enough to be a concern. She also added that while she does expect prices to rise further, the balancing act of “disinflation” may be good news for wages.

The consumer continues to show resilience towards the volatile and uncertain economic conditions, which is reflected in the performance of the stock market.

Our Methodology

To compile our list, we sifted through Yahoo Finance’s list of stocks that are experiencing high trading volumes. We looked at the analyst and investor sentiment for each stock and narrowed down our selection to 12 stocks that were the most popular among elite hedge funds. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2024.

Note: All price/volume data is as of January 31, 2025.

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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Microsoft Corporation (NASDAQ:MSFT)

Volume:  53.8 Million

Average Volume (3-Month): 21.3 Million

Number of Hedge Fund Holders: 279

Microsoft Corporation (NASDAQ:MSFT) generated solid results in the fiscal second quarter of 2025. For the quarter ended December 31, 2024, MSFT generated $69.6 billion in revenue, up by 12%, and $24.1 billion in net income, up by 10%. The company attributes its revenue growth to its cloud and AI business. In an impressive feat, the company saw a 175% increase in revenue from its AI business reaching $13 billion. Similarly, its cloud business generated $40.9 billion in revenue, up by 21% year-over-year.

The stock went higher after reporting solid financial results in the fiscal second quarter of 2025. On January 31, Sachin Mittal, an analyst at DBS, maintained a buy rating on the stock, retaining a price target of $531. Mittal maintained a buy rating on MSFT due to its strong financial results, especially in its cloud and AI business. In addition to that, the analyst expects Microsoft (NASDAQ:MSFT) to expand its leadership position in the productivity software market and witness significant growth opportunities from its investments in AI.

Microsoft Corporation (NASDAQ:MSFT) plans to continue investing in its cloud and AI business, pushing innovations across its tech stack in an attempt to capture the massive opportunity ahead. Analysts are also bullish on the stock and their median price target of $500 points to an upside of 20.5%.

Overall, MSFT ranks 1st on our list of most buzzing stocks to buy according to hedge funds.. While we acknowledge the potential of MSFT to grow, our conviction lies in the belief that certain 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 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 Complete List of 59 AI Companies Under $2 Billion in Market Cap

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