Aristotle Capital Management, LLC, an investment management company, released its “Value Equity Strategy” second quarter 2025 investor letter. A copy of the letter can be downloaded here. Although the U.S. equity market started with volatility in the second quarter, it rebounded with strength, with the S&P 500 Index rising 10.94% during the quarter. The composite returned 4.88% gross of fees (4.75% net of fees) in the first quarter, outperforming the 3.78% return of the Russell 1000 Value Index and underperforming the 10.94% return of the S&P 500 Index. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.
In its second quarter 2025 investor letter, Aristotle Capital Value Equity 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 4.07%, and its shares gained 14.66% of their value over the last 52 weeks. On July 21, 2025, Microsoft Corporation (NASDAQ:MSFT) stock closed at $510.06 per share, with a market capitalization of $3.791 trillion.
Aristotle Capital Value Equity Strategy stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its second quarter 2025 investor letter:
“Microsoft Corporation (NASDAQ:MSFT), the global leader in software and enterprise services, was the top contributor for the quarter. The company delivered a strong quarterly update, with Azure revenue growing 35%—well ahead of expectations— driven by improved execution in core cloud services and sustained AI-related demand. Importantly, strength extended beyond AI, with renewed momentum in traditional enterprise cloud workloads, such as data platforms, infrastructure hosting and developer services. Profitability also impressed, with operating margins expanding to 46% supported by disciplined cost control. While near-term results were strong, our conviction remains grounded on Microsoft’s enduring advantages: dominant positions in mission-critical software, high recurring revenue driven by a deep subscriber base, and the ability to reinvest at scale. One example is GitHub Copilot—a generative AI tool that helps developers write, review and debug code—which now has over 15 million users and is seeing increasing enterprise adoption. With widespread use of offerings like Copilot, Teams and LinkedIn, and underpinned by robust FREE cash flow supporting continued innovation, we believe Microsoft remains exceptionally well-positioned to compound value across cloud, productivity and AI enabled workflows over the long term.”
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 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 AI stocks analysts are tracking closely. In addition, please check out our hedge fund investor letters Q2 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.
