Microsoft Corp. (MFST) saw improved growth over the past few months, outperforming the S&P500 and rising by approximately 110% compared to the S&P’s gain of about 85%. Hedge funds were selling in the fourth quarter; however, the technology company rose on the WhaleWisdom Heatmap from a rank of thirty-three to four.
Microsoft is a multinational technology company that produces software, hardware services, and related services. The company’s revenue comes from three core business segments: productivity and business processes, intelligent cloud, and personal computing. While initially well known for its personal computer software such as Windows and the Office Suite, this tech giant also found success as it branched out into the video game market, server applications, cloud services, and search engine advertising.
Mixed Results from Hedge Funds and Institutions
Hedge funds were selling, in contrast to institutions. Looking at fourth-quarter activity, the aggregate 13F shares held by hedge funds decreased to about 994.6 million from 1.0 billion, a decrease of approximately 3.0%. Of the hedge funds, 67 created new positions, 262 added to an existing one, 31 exited, and 348 reduced their stakes. Institutions increased their aggregate holdings by about 1.3% to approximately 5.3 billion from about 5.2 billion.
Analysts expect to see earnings rise over the next two years, with year-over-year estimated earnings estimated to reach $10.77 per share in 2023, up from $9.44 for 2022. Revenue forecasts are also noteworthy, with revenue expected to increase to $226.5 billion by June of 2023, up from $198.8 billion in June of 2022. The company saw a healthy rise in 13F metrics over the past twenty years, indicative of continued investment potential.
Analyst Brent Thill of Jefferies LLC gave Microsoft a Buy rating and a $400 price target, sharing enthusiasm about its growth potential due to its newer Power Platform, a line of business intelligence and software applications with a low-code appeal. Power Automate allows automation of business workflows across multiple applications and software as a service (SaaS) options. Wedbush Securities analyst Dan Ives commented on recent and anticipated future Federal Reserve increases in interest rates, noting that it’s the right time “to own oversold tech stocks,” such as Microsoft.
Microsoft’s estimated earnings through 2023 and trend of long-term 13F metrics are encouraging for investors. The technology company is already a leader in the industry and has opportunities for continued revenue growth. Combined with overall market performance, these factors make Microsoft a stock to watch.