Billionaire Bill Gates Has More Than 50% of His Trust Invested in 2 Brilliant Stocks

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The Bill & Melinda Gates Foundation (BMGF) engages in various philanthropic activities around the world, and the organization had issued grant payments totaling $78 billion as of December 2023. That charitable giving is made possible by the BMGF Trust, which invests the foundation’s endowment.

Importantly, the BMGF Trust returned 11.4% annually during the three-year period that ended in June 2024. Meanwhile, the S&P 500 (SNPINDEX: ^GSPC) returned 10% annually during the same period, including dividends. That outperformance makes the BMGF Trust a good case study for individual investors.

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As of June 2024, the BMGF Trust had $48 billion spread across 23 positions, but 54% of the funds were concentrated in just two stocks: 33% were allocated to Microsoft (NASDAQ: MSFT) and 21% were invested in Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B). Both stocks were brilliant investments over the last three years in that they handily outperformed the S&P 500.

Here’s what investors should know about Microsoft and Berkshire.

Microsoft has two important growth engines in commercial software and public cloud services, and it has a strong competitive position in both areas. Indeed, Morgan Stanley estimates its market share in commercial software will apporach 19% this year due to strength in business productivity (Office), enterprise resource planning (Dynamics), and business intelligence (Power Platform) products.

Microsoft has steadily gained software market share in recent years, and that patterns is likely to continue as the company integrates artificial intelligence (AI) features into its products. As an example, generative AI assistant Microsoft 365 Copilot was made generally available last November and nearly 70% of Fortune 500 companies have already adopted it.

Microsoft is truly formidable because it pairs industry-leading commercial software with cloud infrastructure and platform services (CIPS). Admittedly, its cloud computing unit Azure lost 3 percentage points of CIPS market share during the past year, according to Synergy Research Group. But Rishi Jaluria at RBC Capital believes Microsoft is in a better position than other major public clouds due to its unique partnership with OpenAI.

Overall, Microsoft reported encouraging financial results in the first quarter of fiscal 2025, which ended in September 2024. Revenue increased 16% to $65.6 billion on particularly strong sales growth in cloud services. Meanwhile, GAAP earnings increased 10% to $3.30 per diluted share. Importantly, the recent acquisition of Activision added 3 points to sales growth and subtracted 2 points from earnings growth.

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