TLDR
- In the third quarter, Peter Thiel’s hedge fund, Thiel Macro, liquidated its entire stake in Nvidia and reduced its Tesla holdings by 76%.
- Thiel initiated a new investment in Microsoft, which now makes up 34% of his fund’s portfolio.
- For fiscal Q4 2025, Microsoft announced earnings per share of $3.65 and revenue of $76.44 billion, an 18% increase from the previous year.
- Azure cloud revenue saw a 39% year-over-year rise, totaling $46.7 billion for the quarter.
- Microsoft’s stock is currently priced near $473, a 2% decline from its last closing price, giving the company a market capitalization of approximately $3.5 trillion.
Peter Thiel generated significant attention in Q3 by completely divesting from Nvidia and cutting his Tesla position by 76%. The Palantir co-founder and hedge fund manager subsequently made a substantial investment in Microsoft. This new holding now constitutes 34% of the Thiel Macro portfolio.
This strategic shift is notable considering Microsoft’s already substantial historical appreciation. Since its initial public offering in March 1986, the stock has generated a return of roughly 483,000%. Nevertheless, Thiel seems to believe the technology behemoth has further potential for growth.
The current share price for Microsoft is around $473. This marks a decrease of approximately 2% from the prior day’s close. The stock remains significantly higher than its 52-week low of $345, though it is below its recent high near $555.
Thiel’s departure from Nvidia is surprising given the chipmaker’s market leadership. Nvidia commands more than 80% of the AI accelerator market. Its graphics processing units are still considered the industry benchmark for AI training and inference tasks.
Potential competition from Broadcom and Marvell might have influenced Thiel’s decision. Both firms have created custom AI chips for major technology companies such as Alphabet. Export controls limiting Nvidia’s sales in China may also be a consideration.
Former President Trump recently indicated Nvidia could sell its H200 GPUs in China. This development could offer the chipmaker a surprising tailwind.
Microsoft’s AI Monetization Push
Microsoft is capitalizing on its extensive enterprise software suite to monetize artificial intelligence. The company has integrated generative AI copilots throughout its range of products. This encompasses office productivity software, cybersecurity tools, and developer platforms.
Monthly active users for these AI features reached 150 million in September. This is an increase from 100 million just three months prior. CEO Satya Nadella is persistently driving AI adoption across all Microsoft services.
Azure holds the position as the second-largest cloud service provider. The platform has captured about 3 percentage points of market share since the launch of ChatGPT in late 2022. Constraints on data center capacity prevented even more rapid expansion.
Microsoft is now aggressively building out its data center infrastructure. According to Morgan Stanley’s latest CIO Survey, Azure is identified as the cloud provider most expected to gain market share in the coming three years.
Strong Fiscal Results Drive Confidence
The company posted exceptional financial results for fiscal Q4 2025. It achieved earnings of $3.65 per share on revenue of $76.44 billion. This equates to year-over-year growth of 24% and 18%, respectively.
Cloud revenue for the quarter amounted to $46.7 billion. Azure experienced a 39% increase compared to the same period last year. Company leadership forecasts revenue growth in the mid-teens and Azure expansion in the high-30s for the upcoming quarter.
Microsoft’s market capitalization is approximately $3.5 trillion. The stock is trading at a price-to-earnings ratio in the mid-30s. This premium valuation is based on anticipated ongoing growth in AI and cloud services.
Analysts on Wall Street project that adjusted earnings will increase by 16% per year through fiscal 2027. Market sentiment remains overwhelmingly positive. The majority of analyst ratings are Buy, with price targets suggesting potential gains from the current price level.
Over the past four quarters, Microsoft has exceeded consensus earnings estimates by an average of 8%. The firm has a consistent track record of outperforming expectations. Solid operational execution continues to support its growth narrative.
Recent after-hours trading activity momentarily elevated Microsoft’s valuation above $4 trillion. This positioned the company alongside Nvidia as a leading ultra-mega-cap in the AI sector.
Management provided guidance for mid-teens revenue growth and high-30s Azure growth for the next quarter, with cloud revenue having achieved $46.7 billion in fiscal Q4 2025.
