Strong Azure Results Powered Microsoft Corporation’s (MSFT) Rally Soumya Eswaran Fri, October 16, 2026 at 12:06 PM EDT 2 min read MSTR -8.29% MSFT -1.81% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Diamond Hill Capital, a First Eagle Investment Management company, issued its Q3 2026 investor letter for its "Large Cap Strategy". The letter can be downloaded here. The Strategy returned 3.18% (net of fees) in the quarter, outperforming the 2.61% return of the Russell 1000 Value Index. Key positive contributors included stock selection in information technology, an underweight in utilities, and an overweight in energy, while detractors were found in industrials, health care, and consumer staples. Looking ahead, the firm anticipates below-average returns due to high equity market valuations, although attractive bottom-up investment opportunities remain. Notably, software and legacy technology stocks outperformed in Q3 2026, despite recent index exclusions; some AI-related stocks that had boosted the index previously underperformed. Additionally, reviewing the Strategy's top five holdings provides insight into its best positions for 2026.
In its Q3 2026 investor letter, Diamond Hill Capital Large Cap Strategy highlighted Microsoft Corporation (NASDAQ:MSFT). Microsoft Corporation (NASDAQ:MSFT) is a multinational software company that develops and supports software, services, devices, and solutions, holding dominant positions in software, cloud infrastructure, generative AI, and gaming. On October 15, 2026, Microsoft Corporation (NASDAQ:MSFT) closed at $539.44 per share, reflecting a market capitalization of $4.01 trillion. Microsoft Corporation (NASDAQ:MSFT) posted a one‑month return of 9.25%, while its shares gained 5.04% over the past 52 weeks.
Diamond Hill Capital Large Cap Strategy stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q3 2026 investor letter:
"Shares of Microsoft Corporation (NASDAQ:MSFT) rose after the company reported strong Azure results that included a growth reacceleration in quarterly results and guidance. Microsoft remains very well positioned to implement AI into its current offerings while also adding enormous AI computing capacity to lease to customers on attractive economic terms."
Microsoft Corporation (NASDAQ:MSFT) ranks second on our list of 40 Most Popular Stocks Among Hedge Funds. According to our database, 273 hedge fund portfolios held Microsoft Corporation (NASDAQ:MSFT) at the end of the second quarter, compared to 282 in the previous quarter. While we acknowledge the potential of Microsoft Corporation (NASDAQ:MSFT) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
In another article, we discussed Microsoft Corporation (NASDAQ:MSFT) and shared a list of the most active blue-chip stocks to buy. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.
This article is originally published at Insider Monkey.
