Shares in Microsoft (MSFT) dropped today after billionaire hedge fund manager Chris Hohn slashed his firm TCI’s holding from about 10% to just 1% because of the tech titan’s vulnerability to AI.
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
Microsoft: Long-Term Uncertainty
According to a report in the Financial Times, TCI’s position had been worth around $8 billion. The report stated that Hohn had told investors that rapid advances in AI have created “uncertainty” around Microsoft’s long-term competitive position.
It is understood that Hohn is particularly worried about the vulnerability of Microsoft Office and productivity software, where AI agents and new workflows could replace traditional applications. Hohn also sees competitive challenges in Microsoft’s Azure cloud computing offerings.
The FT stated that the move was a notable one given that TCI has been a “long-term Microsoft bull” and that it had benefited from a near 400% rise in MSFT stock over a nine-year period.
Google is the Winner
It appears that Alphabet (GOOGL) is the big gainer with Hohn increasing his stake in the Google owner. It is now TCI’s largest tech position.
Despite Microsoft being one of the main AI leaders thanks to its long-standing partnership with ChatGPT creator OpenAI, there has been some disquiet from investors about the returns it can expect from its AI spending.
If Hohn believes that the threat from AI innovators is so pressing that he has sold almost his entire stake then that will be a concern for the tech titan – and perhaps others – going forward.
Although, MSFT still has its backers. Earlier this week, Tigress Financial Partners analyst Ivan Feinseth said he had been encouraged by MSFTs’ Q3 results with a 29% jump in Cloud revenue and a 123% increase in AI-related revenue.
Hedge Fund Headache
MSFT has though been taking quite the bashing from the hedge fund sector in general over the last few weeks. According to the TipRanks Hedge Fund tool, hedge funds have decreased holdings by 2 million shares in the last quarter.
What are the Best AI Stocks to Buy Now?
We have rounded up the best AI stocks to buy now using our TipRanks comparison tool. As can be seen below, it is MSFT with the best upside of 34.28%.
