Microsoft (MSFT) Recovered all of its Losses After the Q1 Earnings Report

Qualivian Investment Partners, an investment partnership focused on long-only public equities, released its Q1 2025 investor letter. A copy of the letter can be downloaded here. The fund outperformed the iShares MSCI USA Quality Factor ETF (QUAL) by 66.0% and 59.4% on a gross and net basis, since inception through March 31, 2025. It also exceeded the S&P 500 by 32.7% and 26.1% respectively, on a gross and net basis. In Q1 2025, the fund outperformed QUAL by 5.3% and 5.2% on a gross and net basis, and we outperformed the S&P 500 by 5.2% and 5.1% on a gross and net basis. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, Qualivian Investment Partners 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 6.07%, and its shares gained 6.79% of their value over the last 52 weeks. On July 1, 2025, Microsoft Corporation (NASDAQ:MSFT) stock closed at $492.05 per share, with a market capitalization of $3.657 trillion.

Qualivian Investment Partners stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q1 2025 investor letter:

“Our bottom 3 contributors in the quarter were Alphabet, Amazon, and Microsoft Corporation (NASDAQ:MSFT), due to the rotation away from hyperscalers due to the DeepSeek announcement. Alphabet and Amazon recovered some of their losses in Q1 following their Q1 earnings reports in late April, while Microsoft recovered all its losses and has gone on to new highs since its Q1 earnings report.

All three companies expressed their confidence in the opportunities before them from their investments in generative AI. Most said customer demand strained their capacity to meet their Cloud and Gen AI services (LLM hosting, training, and inferencing services).

We are closely monitoring these three hyperscalers to see whether the capital spending and resulting returns produce the desired value.”

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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 potential of Microsoft Corporation (NASDAQ:MSFT) as an investment, our conviction lies in the belief that 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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Microsoft Corporation (NASDAQ:MSFT) and shared large-cap stocks to buy from Goldman Sachs stock portfolio. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of MSFT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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