We recently published a list of 10 Hot AI Stocks This Week. In this article, we’ll take a look at where Microsoft Corporation (NASDAQ: MSFT) stands this week compared to other hot AI stocks.
Paul Hickey, co-founder of Bespoke Investment Group, said during an interview with CNBC on a latest show that despite the market’s gains still concentrated in a few names, he is optimistic in the short and long term due to the AI.
“The longer-term play is the AI business. This is an AI bull market. Every bull market has a theme, and ChatGPT was to AI what Netscape and AOL were to the Internet.
Hickey also discussed the possible scenario in which market gains begin to widen.
“ChatGPT did not invent AI; this made it tangible for consumers and businesses, much like Netscape did with the Internet. This has made things much more convenient on the part of businesses and the consumer. So I think in that regard, there’s a lot more investment to be made, and we’ve seen infrastructure stocks in AI benefit from that. But even in the last week, some of these software names – and we’re slowly going to start to see this spread to the rest of the economy.
For this article, we’ve selected 10 AI stocks that are currently trending based on the latest news and analyst ratings. For each company, we mentioned the number of hedge fund investors. Why are we interested in stocks that hedge funds are piling into? The reason is simple: our research has shown that we can outperform the market by imitating the stocks selected by the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each 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.
Number of hedge fund investors: 279
Microsoft Corp (NASDAQ: MSFT) is among the top enterprise software companies expected to benefit in 2025, according to a KeyBanc survey of chief information officers, which shows that IT budgets are expected to increase over the course of the year. year to come.
The survey finds that IT budgets are expected to increase 3.9% year-over-year in 2025. Among large companies surveyed, 71% of respondents expect their IT budgets to increase, while 82% of small businesses surveyed also expect growth.
“Following our second half 2024 survey, we are progressively more optimistic compared to our half-year report six months ago,” KeyBanc analyst Jackson Ader said in a detailed report. “We are seeing positive signs of a potential rebound in front office applications in 2025 with increasing budget priorities. »
“Specific calls from vendors include the growing priority of CRM and the fact that MSFT remains a leading cloud provider and beneficiary of generative AI, a category where spending expectations were on the rise in this survey “, he added.
Analysts say most of the revenue growth comes from the PC segment, while investors are paying more attention to AI and Azure. Azure’s 34% growth met expectations, although forecasts for the next quarter fell short, projecting growth between 31% and 32%, or 1 percentage point below forecasts. This decline is attributed to delays in data center capacity from third-party providers, although Azure consumption trends remained stable.
Investors hoping for a rebound in IT spending were likely disappointed, as Azure’s flat consumption suggests no significant increases in the second half. Additionally, lower-than-expected forecasts for the second quarter highlighted subdued growth expectations.
AI services, however, contributed 12 points to Azure’s growth, a steady continuation from the previous quarter. Microsoft management has confirmed strong demand for AI services, although supply constraints limit further expansion. Microsoft Corp (NASDAQ: MSFT) forecasts that AI-related revenues, including M365 Copilot and Azure AI, could reach $10 billion annually by the next quarter, making it one of the segments to the fastest growth in the history of Microsoft Corp (NASDAQ: MSFT).
“Microsoft Corporation (NASDAQ:MSFT) came under pressure during the quarter as investors worried about increased investment as Microsoft invests heavily in the booming generative AI market. Investors are concerned about the company’s growing capital intensity and the uncertain return on that investment. We continue to believe that Microsoft is in a strong competitive and strategic position and poised to capture market share as businesses large and small navigate a digital-first landscape and adopt enterprise-class tools. AI-based generative productivity. The company’s dominant presence in the enterprise space, combined with its comprehensive product portfolio spanning Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS), makes it a crucial provider of IT solutions for businesses of all sizes. Microsoft is effectively executing its strategy in a large market by providing a roadmap for digital transformation and the adoption of cutting-edge AI-based solutions, such as ChatGPT and its Copilot suite of applications, that improve productivity and reduce costs. Therefore, we expect Microsoft’s solutions to demonstrate resilience even in a more challenging macroeconomic environment, supporting low double-digit growth in intrinsic value within our investment horizon.
Overall, MU ranks 2nd on our list of hot AI stocks this week. While we recognize the potential of Amazon.com (NASDAQ: AMZN), our belief lies in the belief that under the radar AI stocks hold more promise in terms of higher returns in a shorter time frame. If you’re looking for an AI stock that’s more promising than AMZN but is trading at less than 5x earnings, check out our report oncheapest AI stock.
