We recently compiled a list of the Top 10 AI Stocks on Wall Street’s Radar Right Now. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against the other AI stocks.
Users are adopting artificial intelligence tools at an unprecedented pace. As reported by Reuters, OpenAI weekly active users surged past 400 million in February, reinforcing the observation. The artificial intelligence startup had 300 million weekly active users in December 2024, signifying an increase of 100 million users. Furthermore, the company’s paying business users also crossed 2 million in February, a figure that has more than doubled from its last update in September 2024.
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With OpenAI boasting its successes despite DeepSeek’s emergence, other tech companies are also joining in the parade. xAI, led by Musk, has recently revealed Grok3, the latest iteration of its chatbot. This innovation is in direct competition with AI models by companies such as OpenAI and DeepSeek. It is being rolled out immediately to Premium+ subscribers on X. xAI is also launching a new subscription tier, SuperGrok. This would be for users accessing the chatbot via its mobile app and Grok.com website.
“Grok-3 across the board is in a league of its own”.
-Musk said during a livestream alongside three xAI engineers.
Analysts are also pouring in their comments about xAI’s latest innovation.
“The introduction of Grok-3 puts xAI back in the race for leadership in open-source LLMs. It outperforms the current state-of-the-art models on some benchmarks, which makes xAI relevant again”.
– Gil Luria, managing director at D.A. Davidson.
While Luria did point out xAI’s relevancy in the leadership in open-source LLMs, it was also noted that improvements over the Grok-2 model appear to be too small to justify the enormous resources used to train it.
Meanwhile, Anthropic, another AI startup, is doing its best to catch up with firms such as OpenAI. More than a week ago, the company projected that its revenue could reach as high as $34.5 billion in 2027. The report revealed that in a base case scenario, Anthropic’s revenue would reach $12 billion in 2027, up from $2.2 billion in 2025. Back in January, Reuters also reported how Anthropic is nearing a deal to raise $2 billion at a price that values the company at $60 billion.
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 275% since May 2014, beating its benchmark by 150 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 February 19, the company unveiled an artificial intelligence model of a videogame. The AI model, known as Muse, will allow the generation of visuals and actions. The model has been made in collaboration with Ninja Theory, which is a developer under Xbox Game Studios, Microsoft’s gaming division.
With video game development costs continuing to rise, the push toward artificial intelligence is likely a step forward to mitigating them. New gaming spend has also been weak since customers are sticking to proven titles due to economic uncertainty.
“We are already using Muse to develop a real-time playable AI model trained on other first-party games, and we see potential for this work to one day benefit both players and game creators”.
-Fatima Kardar, corporate vice president for gaming AI.
Overall MSFT ranks 2nd on our list of the AI stocks on Wall Street’s radar right now. 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 timeframe. 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.
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Disclosure: None. This article is originally published at Insider Monkey.
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