Billionaire Ken Griffin doesn't buy into all of the hype about artificial intelligence (AI). For example, he disagrees with those who predict that AI will take over many jobs done by humans anytime soon. Griffin also recently stated that generative AI isn't helping hedge funds beat the market.

However, Griffin's own hedge fund, Citadel Advisors, is heavily invested in AI. And Griffin just increased his position in one AI stock by over 1,600%.

 

Griffin's aggressive AI buy

Citadel significantly added to its stake in Nvidia in the second quarter of 2025, but by roughly 414%, rather than by over 1,600%. It also bought another 3.27 million shares of Amazon in Q2, an increase of around 158%, compared to the previous quarter.

However, neither Nvidia nor Amazon ranks as Griffin's most aggressive AI buy among Citadel's top 10 holdings. That honor goes to Microsoft (MSFT -0.43%). Citadel added 1.87 million shares of the tech giant, enough to boost its position by a whopping 1,636%. At the end of Q2, the hedge fund's stake in Microsoft was worth around $985 million.

Microsoft has been a familiar name in Citadel's portfolio for years. Griffin first initiated a position in the stock in 2013 and has actively bought and sold shares of the big software company along the way.

Citadel often hedges its positions in stocks using options and has taken this approach with Microsoft. At the end of Q2, Citadel owned call options for roughly 107.8 million of the tech giant's shares and put options for nearly 7 million shares.

Lots of Microsoft fans

Griffin isn't the only billionaire who has been scooping up shares of Microsoft. Israel "Izzy" Englander added more shares for his Millennium Management hedge fund in Q2. So did Chase Coleman for Tiger Global Management's portfolio.

Wall Street absolutely loves Microsoft, too. Of the 58 analysts surveyed by S&P Global in October who cover the stock, 57 rated it as a buy or strong buy. The sole outlier recommended holding Microsoft.

Analysts think Microsoft has more room to run after its gain of over 20% this year. The average 12-month price target reflects an upside potential of roughly 21%.

Why is Microsoft so popular these days? The company is benefiting tremendously from a massive AI tailwind. It has integrated OpenAI's GPT-5 throughout its product lineup. Microsoft Azure trails only Amazon Web Services (AWS) in the cloud market, which is booming, thanks largely to organizations scrambling to build and deploy generative AI applications.

Is Microsoft stock a buy?

At first glance, the enthusiasm for Microsoft might seem overdone. After all, we're talking about a stock that trades at more than 33 times forward earnings. That's a steep valuation. However, I think Microsoft deserves to be priced at a premium.

The company continues to make money hand over fist. Microsoft reported revenue of $281.7 billion in its latest fiscal year, which ended June 30, 2025, a year-over-year increase of 15%. Its profits totaled $101.8 billion, up 16% year over year. Those numbers reflect strong growth for a $3.8 trillion business.

Some might fret that Microsoft is overly dependent on OpenAI. But with the tremendous popularity of ChatGPT and GPT-5, in particular, the relationship with OpenAI is a big plus for the company. Importantly, though, the software giant has expanded its AI partnerships by offering Anthropic's Claude large language models (LLMs) to Microsoft Copilot Studio.

I believe that agentic AI, which can automate processes performed by humans, holds enormous potential for Microsoft. We're only in the early innings of the adoption of agentic AI. I also think that Microsoft could be a big player in quantum computing, a technology that could transform multiple industries and pave the way for more powerful AI systems.

In my opinion, Griffin was smart to buy Microsoft stock when he did. Wall Street is right to be bullish about this tech stock, too. Microsoft remains a great pick for long-term investors.