Microsoft (MSFT, Financial) led the pack of stocks that funds managing more than $100 million bought in the third quarter, according to GuruFocus data.
A screener showed that following Microsoft the most-bought stocks were Apple, Facebook, Google, Intel, Cisco, Google, Oracle, IBM and Qualcomm.
Microsoft lured investors with its explosive growth in cloud, where its leading rival is Amazon. Because Amazon is categorized as retail, it does not appear in the tech stock screen. But in a search of all S&P 500 stocks, Microsoft trounces its competitor for popularity among investment firms, coming in second place while Amazon ranked fifth.
Microsoft’s commitment to expanding its cloud business has lured investors. The cloud market is expected to grow by 40% per year, while infrastructure services revenue reached $12 billion, Synergy Research Group reported after analyzing third-quarter data.
Though Amazon (AMZN, Financial) has the lion’s share of the market, competitors Microsoft, Google (GOOG, Financial) and Alibaba (BABA, Financial) have also gained ground, the analysts said. Microsoft took 11% of the market, while Amazon nabbed 34%, the research group said in a separate study from July. Microsoft tripled market share gain, however, growing 3%, compared to Amazon’s 1%. Microsoft’s next competitor, IBM, had 8% of the pie, holding steady from one year prior.
In its first fiscal quarter ended Sept. 30, Microsoft’s cloud service Azure nearly doubled in size, with revenue bolting 90% from the prior year. It was by far its fastest growing reported product or service, though the company saw increases across all of them. The company exceeded $20 billion in commercial cloud average run rate, beating its goal from two years ago, Satya Nadella, Microsoft’s chief executive officer said in a statement.
Performance in Azure helped boost Microsoft’s revenue 12% year over year to $24.5 billion, while net income jumped 16% to $6.6 billion. The company also spent $4.8 billion in share repurchases and dividends and increased its dividend by 8% to 42 cents per share.
Year to date, Microsoft stock climbed 37% to close near a 10-year high at $62.70 Wednesday, compared to Amazon’s 55% gain to $1,161 per share.
The largest holders among the gurus tracked by GuruFocus are the company’s founder Bill Gates (Trades, Portfolio) with 0.73% of shares outstanding. Dodge & Cox follows him with 0.52% of Microsoft’s shares, and First Eagle Investment (Trades, Portfolio) Management with 0.34%.
Lee Ainslie (Trades, Portfolio) was the only guru to start a position, while George Soros (Trades, Portfolio) made the biggest increase, growing his position by 2,475% to 103,000 shares. Stanley Druckenmiller (Trades, Portfolio) has the biggest space in his long portfolio dedicated to the company at 9.85%, followed by Erich Mindich with 6.89%.
Microsoft has a price-earnings ratio of 28.25 and price-book ratio of 7.18. Its price-sales ratio of 6.97 is near a 10-year high.
