Is Microsoft Corporation (MSFT) Chase Coleman III’s Top Pick?

Accounting for a 10.49% share ($3.40 billion) in the billionaire’s portfolio, Microsoft Corporation (NASDAQ:MSFT) ranks as Chase Coleman III’s top stock pick. We recently published a list of youngest hedge fund billionaires and their top stock picks.

Citi stated on February 10, 2026, that despite positive earnings revisions, the recent software selloff has created a fundamental opportunity as markets cut terminal multiples due to concerns about AI disruption.

In a fresh screen, Citi found that software stocks had fallen at least 10% in the previous month, while their terminal multiples were now below forward P/E ratios, and that consensus EPS estimates for 2025–2027 were higher. The firm cited Microsoft Corporation (NASDAQ:MSFT) as one of the companies that was well-positioned in all AI scenarios, claiming that recent pressure was more the result of multiple compressions than of immediate fundamental deterioration.

In contrast, on February 9, 2026, Melius Research downgraded Microsoft Corporation (NASDAQ:MSFT) from ‘Buy’ to ‘Hold’ with a $430 price target, citing the need for more AI-driven capital expenditures to keep up with Google and Amazon, which could put additional strain on free cash flow. Under the updated free cash flow assumptions, the analyst also raised concerns about valuation.

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Microsoft Corporation (NASDAQ:MSFT) develops software, cloud services, devices, and enterprise solutions across segments, including Productivity and Business Processes, Intelligent Cloud, and More Personal Computing to serve consumers, developers, and organizations worldwide.

While we acknowledge the potential of 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.

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Disclosure: None.