We recently compiled a list of 10 AI Stocks That Could See Parabolic Growth According to Financial Media. In this article, we will examine how Microsoft Corporation (NASDAQ:MSFT) stands relative to other AI stocks.
One of the major growth drivers of the AI industry in recent years has been the exponential increase in data generation. The rise of the Internet of Things (IoT), social media, e-commerce, and various digital platforms has led to an unprecedented increase in data generation. This massive amount of data serves as fuel for AI systems, particularly in the development of machine learning models. Clive Humby, a venture capitalist, highlighted the critical role of data in the development of AI by proclaiming that data is the new oil. The ability to collect, process, and analyze large data sets allows AI algorithms to improve their accuracy and provide more sophisticated results.
To learn more about these developments, visit The 33 Most Important AI Companies You Should Pay Attention To And 20 industrial stocks that are already riding the AI wave.
To understand the AI revolution, it’s also important to understand advances in computing power. Moore’s Law, which predicts that the number of transistors on a chip will double approximately every two years, has played a crucial role in improving the processing power available for AI applications—think companies like Taiwan Semiconductor Manufacturing and their advanced node processing. The advent of graphics processing units (GPUs) and tensor processing units (TPUs)—like those made popular by NVIDIA—has further accelerated the development of AI by enabling faster computations and more complex model training. Ray Dalio, founder of Bridgewater Associatesone of the world’s largest hedge funds, says these hardware improvements are a game changer for AI.
The availability of massive investment in AI research and startups is also a key growth driver. According to a PwC report, global investment in AI is expected to reach $15.7 trillion by 2030, with the technology contributing $6.6 trillion to GDP through increased productivity and $9.1 trillion through consumption effects. This influx of capital is driving innovation and commercialization of AI technologies across industries from healthcare to finance. Leading hedge fund managers are also taking notice. Ken Griffin, PwC’s managing director, Citadel Investment Groupclaims that AI is the most transformative technology of our time, and not just another bubble, but a structural change in the economy.
To learn more about these developments, go to Billionaire Stan Druckenmiller bets on AI infrastructure, tobacco and industrial stocks And 10 Tech Stocks to Watch Amid Market Volatility, According to Bernstein Analyst..
Our methodology
For this article, we selected AI stocks that have explosive growth potential according to the financial media. These stocks are also popular among hedge funds. Why do we care about stocks that hedge funds are heavily invested in? The reason is simple: Our research has shown that we can outperform the market by mimicking the best stock picks of 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.
Microsoft Corporation (NASDAQ:MSFT)
Number of hedge fund holders: 279
Microsoft Corporation (NASDAQ:MSFT) is a Washington, D.C.-based technology company. The company has committed to investing heavily in AI projects, and Wall Street is already starting to see the return on those investments. Evercore ISI analyst Kirk Materne recently noted the tech giant’s strong quarterly results, highlighting strong commercial bookings and management’s comments on positive demand signals. The investor’s note also highlighted the expectation that Azure’s growth will accelerate in the second half of the year as more AI capabilities come online. The analyst noted that the company remains well-positioned for sustainable top- and bottom-line growth.
Microsoft Corporation (NASDAQ: MSFT) is reportedly considering a major new investment in artificial intelligence startup OpenAI. In 2023, the tech giant invested $10 billion in the California-based artificial intelligence company. This new round of funding is expected to push OpenAI’s valuation to over $100 billion, with Apple and NVIDIA also considering investments. Reports indicate that Apple may partner with OpenAI to create an offering to rival Google in the internet search space.
MSFT as a whole ranks 4th on our list of AI stocks that could go parabolic according to the financial media. While we recognize the potential of MSFT as an investment, our conviction lies in the belief that some AI stocks have more promise to deliver higher returns, and in a shorter time frame. If you are looking for an AI stock that is more promising than MSFT but is trading at less than 5x earnings, check out our report on the the cheapest AI stock.
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Disclosure: None. This article was originally published on Insider Monkey.