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Guinness Global Innovators, an investment management company, recently released its Q1 2026 quarterly investor update for its “Guinness Global Equity Income Fund”. A copy of the letter is available to download here. The Fund focuses on providing investors with global exposure to dividend-paying companies. In Q1 2026, the fund returned was -0.5% (GBP), compared to -1.6% for the MSCI World Index and 0.1% for the IA Global Equity Income sector average. The quarter saw notable changes in market sentiment driven by geopolitical tensions and energy market disruptions. The market shifted focus from growth sectors, particularly mega-cap technology and software, to value-oriented, defensive, international, and 'physical economy' stocks. The Fund gained from this transition towards defensive and value areas in the quarter. The letter discusses the impact of macro events and market dynamics on Q1 performance and examines software industry valuations amid rising concerns around AI-driven disruption. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.

In its first-quarter 2026 investor letter, Guinness Global Equity Income Fund 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 June 10, 2026, Microsoft Corporation (NASDAQ:MSFT) closed at $397.36 per share. One-month return of Microsoft Corporation (NASDAQ:MSFT) was -2.95%, and its shares lost 17.02% over the past 52 weeks. Microsoft Corporation (NASDAQ:MSFT) has a market capitalization of $2.95 trillion.

Guinness Global Equity Income Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q1 2026 investor letter:

"Microsoft Corporation (NASDAQ:MSFT) was the Fund’s weakest performer. Much of the poor performance came following the cloud giant’s earnings release at the end of January. The stock fell by double digits on the news that its fast-growing cloud division, Azure, missed lofty expectations, which prompted, in our view, a fairly excessive reaction. Azure growth still came in at +38% year-on-year and would have been over 40% had it allocated all of its graphical processing unit capacity to third-party services, which generate revenue, instead of using compute capacity for internal workloads. There is also some concern over the concentration of Microsoft’s commercial Remaining Performance Obligation (or backlog) as OpenAI accounts for roughly 45% of the $625bn figure. If OpenAI's growth slows or its compute commitments are restructured, a material portion of that backlog is at risk. However, we think the headline overstates the vulnerability. Total backlog grew a staggering 110% year on-year and even if excluding OpenAI entirely, the rest of the backlog was still up 28%, which on its own is a strong demand signal. With demand continuing to exceed supply across workloads and geographies, the underlying breadth and quality of the backlog remains strong..." (Click here to read the full text)

Microsoft Corporation (NASDAQ:MSFT) ranks second on our list of 40 Most Popular Stocks Among Hedge Funds. According to our database, 282 hedge fund portfolios held Microsoft Corporation (NASDAQ:MSFT) at the end of the first quarter, compared to 312 in the previous quarter. In the third quarter of fiscal 2026, Microsoft Corporation (NASDAQ:MSFT) reported revenue of $82.9 billion, marking an increase of 18% and 15% in constant currency. 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 covered Microsoft Corporation (NASDAQ:MSFT) and shared the list of stocks Jim Cramer discussed. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.