We recently published a list of 10 AI Stocks on the Move. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against other AI stocks on the move.
Market uncertainty aside, the AI race is tighter than ever. A report by Stanford University’s Institute for Human-Centered AI (HAI) states that not only has the battlefield become tighter, but also more crowded than previously. The report notes that Google and OpenAI are neck to neck in the race to build cutting-edge AI, and that other companies are fiercely closing in. Meta, Anthropic, and Elon Musk’s xAI are a few of these names. Chinese competitors are also closing in on the AI race. In particular, DeepSeek’s R1 model is very close to the top-performing models of two of the leading AI companies.
“It creates an exciting space. It’s good that these models are not all developed by five guys in Silicon Valley. Chinese models are catching up as far as performance to the US models..but across the globe, there are new players emerging in the space.”
– Vanessa Parli, director of research at HAI.
In recent news, OpenAI has launched its new AI model GPT-4.1, along with smaller versions GPT-4.1 mini and GPT-4.1 nano. These models boast major improvements in coding, instruction following, and long context comprehension.
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According to OpenAI, the models outperform the company’s most advanced GPT-4o model across the board and are available only on OpenAI’s application programming interface (API). In particular, the GPT-4.1 brags a 21% improvement over GPT-4o and 27% over GPT-4.5 on coding. Moreover, there are improvements in instruction following and long context comprehension, which make these models a better choice for powering AI agents.
“Benchmarks are strong, but we focused on real-world utility, and developers seem very happy.”
-OpenAI
OpenAI also noted that these models operate at a “much lower cost” compared to GPT-4.5, and that the company would turn off the GPT-4.5 preview that is available in the API in July because the new models offer “improved or similar performance.”
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds. The hedge fund data is as of Q4 2024.
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).
A development team working together to create the next version of Windows.
Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 317
Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements. On April 14, UBS lowered the firm’s price target on the stock to $480 from $510 and kept a “Buy” rating on the shares. The firm’s price target revision comes after Microsoft’s formal acknowledgement that it is slowing or pausing some data center projects. The firm’s evaluation reveals that Microsoft’s adjustments are most likely not AI demand-related, and that the pausing activity isn’t a materially negative AI demand signal. The analyst further told investors in a research note that any capacity changes related to OpenAI can be absorbed by Oracle and others.
Overall, MSFT ranks 1st on our list of AI stocks on the move. While we acknowledge the potential of 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. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. 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 this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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