We recently published a list of 10 Unstoppable Stocks to Buy in 2025. In this article, we are going to take a look at where MicroStrategy Incorporated (NASDAQ:MSTR) stands against other unstoppable stocks to buy in 2025.
As per the recent earnings update by FactSet dated 24th January 2025, the Q4 2024 earnings season for the S&P 500 has seen a strong start. Notably, the percentage of S&P 500 companies publishing positive earnings surprises and the magnitude of earnings surprises are more than 10-year averages. The analysts anticipate YoY earnings growth rates of 11.3% and 11.6% for Q1 2025 and Q2 2025, respectively. For CY 2025, they project a YoY earnings growth of 14.8%.
Outlook for US Equities For 2025
UBS expects the S&P 500 to reach 6,600 by 2025. Despite the potential for tariff imposition, which can result in volatility over the short term, UBS expects that healthy US economic growth and structural tailwinds from AI might lend some support. The combination- resilient growth and lower Fed rates- has earlier been a powerful force for US stocks. History has suggested that when the Fed cut rates and the country did not enter recession, the broader US equities saw an increase of 18% on average in the 12 months after the first cut.
UBS also believes that the earnings season showcases strong AI capital spending intentions, which supports the positive outlook on technology stocks. Furthermore, the earnings growth continues to broaden into non-tech companies. The US deregulation and tax cuts might support this trend.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Growth Drivers for the US Equities
UBS expects that the US economic backdrop remains supportive, the broader market is less at risk from tariffs compared to other international markets, and structural trends around AI and power & resources boost the outlook. It believes technology, utilities, financials, and healthcare sectors are attractive in the US. The AI infrastructure spending is strong, and the firm expects that key semiconductor components required for AI will remain supply-constrained in 2025, supporting pricing. Furthermore, the tech sector is expected to benefit from an improvement in PC and smartphone end markets.
With respect to utilities, UBS expects that significant growth in AI data centers will fuel power demand, resulting in higher power prices. While the broader financials sector is expected to be aided by Fed rate cuts, the healthcare sector might see recovery in the next few months. This recovery is expected to be driven by higher healthcare spending and advancements in digitalization that can fuel efficiency and reduce costs.
Our Methodology
To list the 10 Unstoppable Stocks to Buy in 2025, we used a screener to filter out the companies having at least $2 billion of market capitalization. Next, we chose stocks that have gained more than 30% over the past 6 months and in which analysts expect an upside of at least 30%. Finally, the stocks were arranged in ascending order of their average upside potential, as of 27 January. We also mentioned the hedge fund sentiment around each stock, as of Q3 2024.
At Insider Monkey we are obsessed with 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).
A software engineer wearing a headset, collaborating with a remote team on a project.
MicroStrategy Incorporated (NASDAQ:MSTR)
Market Cap as of 27th January: $68.2 billion
Return Over Past 6 Months: ~100.4%
Average Upside Potential: ~62.9%
Number of Hedge Fund Holders: 25
MicroStrategy Incorporated (NASDAQ:MSTR) offers AI-powered enterprise analytics software and services. Its unique approach to Bitcoin investment resulted in a distinct market position. Notably, increased institutional adoption of Bitcoin is expected to significantly benefit MicroStrategy Incorporated (NASDAQ:MSTR) in several ways. With more and more institutional investors entering the cryptocurrency market, demand for Bitcoin is projected to increase, resulting in price appreciation. Given the company’s Bitcoin holdings, any appreciation in Bitcoin’s value will directly increase the company’s asset value.
Also, institutional adoption can result in the development of more sophisticated financial products and services associated with Bitcoin, which is expected to offer MicroStrategy Incorporated (NASDAQ:MSTR) some additional ways to leverage its holdings or generate income. The company’s focus remains on increasing the value generated to its shareholders by leveraging the digital transformation of capital. MicroStrategy Incorporated (NASDAQ:MSTR) announced a strategic goal of raising $42 billion of capital over the upcoming 3 years, comprised of $21 billion of equity and $21 billion of fixed income securities, which it refers to as its “21/21 Plan.” Its proven track record of using intelligent leverage continues to serve as a base to execute its strategic 3-year 21/21 Plan.
Greenlight Capital, an investment management firm, released its Q4 2024 investor letter. Here is what the firm said:
“There is an open debate as to whether Bitcoin will at some point enter the mainstream as an official currency. In fact, there is a bill before Congress for the U.S. to establish a “Strategic Bitcoin Reserve” and buy one million Bitcoins over five years. The bill’s purpose appears to be the use of public funds to ramp up the price of Bitcoin, thereby enhancing the wealth of existing Bitcoin holders. This seems a dubious use of taxpayer funds, but the new administration has a lot of Bitcoin-owning supporters, so it might happen. More likely, cooler heads will decide that the government should not borrow another trillion dollars in the bond market to speculate in Bitcoin and that there is, in fact, nothing strategic about doing so.
One of the biggest owners of Bitcoin is MicroStrategy Incorporated (NASDAQ:MSTR). While MSTR owns a small software business, its principal pursuit is buying Bitcoin. In practice, MSTR is an investment company that buys and holds Bitcoin.2 MSTR trades at a large premium to the value of the underlying Bitcoin it holds. The idea is to raise money from new investors at a premium and use the proceeds to buy more Bitcoin. Since the Bitcoin that MSTR buys costs less than the Bitcoin-implied value of MSTR’s stock, the new investment is dilutive to new investors but accretive to existing investors. MSTR’s promoters have labeled the return to existing investors created by this scheme the “Bitcoin yield”. As Bitcoin itself yields nothing, the Bitcoin yield is simply a measure of the Ponzi finance’s effectiveness. Lately, it has been pretty effective.”
Overall, MSTR ranks 1st on our list of unstoppable stocks to buy in 2025. While we acknowledge the potential of MSTR as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than MSTR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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