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MicroStrategy CEO Michael Saylor speaks at the Bitcoin 2021 Convention, a crypto-currency conference held at the Mana Convention Center in Wynwood on June 04, 2021 in Miami, Florida.

Joe Raedle | Getty Images

MicroStrategy was founded almost 35 years ago and existed for most of its history as a little-known software company focused on business intelligence.

But in 2023, the stock has soared 337%, making it one of the biggest gainers in the U.S. among companies valued at $5 billion or more, topping Nvidia’s 234% rally and Meta’s 194% surge.

Unlike its tech peers, which rely on revenue growth and market share gains to fuel their stock prices, MicroStrategy’s investor appeal is almost exclusively due to bitcoin. The company began buying the cryptocurrency in mid-2020 and has since amassed roughly 174,530 bitcoins, worth about $7.65 billion as of late Friday.

Wall Street is so enamored by the story that the stock has about doubled bitcoin’s gain this year.

“It’s really bitcoin,” said Joseph Vafi, an analyst at Canaccord Genuity who has a buy recommendation on the stock. “All the other stuff is healthy and doing a good job, they’re not neglecting it. It’s doing well, it’s leading software in its sector. But it’s basically something we don’t have to worry about.”

MicroStrategy’s market cap is $8.5 billion, meaning 90% of its valued is tied directly to its bitcoin holdings. When bitcoin plummets or soars, so does MicroStrategy. In 2022, bitcoin’s 64% drop pushed MicroStrategy down 74%. Even after its huge pop this year, MicroStrategy shares are still below where they were trading at their high in 2021, during peak crypto.

The bitcoin strategy dates back to July 2020, when the company said it would start putting some of its cash towards alternative assets, including digital currencies. At the time, MicroStrategy had a market cap of roughly $1.1 billion, built on a software business that had been shrinking since 2015. Annual revenue was just under $500 million, and profit was minimal.

At the halfway point of 2020, MicroStrategy had just over $530 million in cash and short-term investments on its balance sheet. Co-founder Michael Saylor, who was CEO at the time, saw that money sitting virtually idle on the sidelines due to low interest rates and wanted to put it to work.

From there, he had to decide whether equities, precious metals or bitcoin would be the best use of funds.

“The reason we decided to buy bitcoin is because bitcoin represents a form of digital gold,” Saylor said on the first earnings call after the company announced its strategy. “It’s harder than gold. It’s smarter, it’s stronger, it’s faster than gold.”

Saylor’s decision created a way for investors to have stake in bitcoin through routine purchases of stock, rather than having to buy the coins directly. Saylor, who stepped down as CEO last year and assumed the role of executive chairman, told CNBC’s Morgan Brennan last week that he expects the bull market in bitcoin to continue next year. He said 99.9% of the capital in the world is invested in real estate, stocks, bonds and commodities, with only 0.1% allocated toward bitcoin.

“People, as they get educated on digital assets, are realizing that they ought to be allocating more and more of their capital to this digital asset and so they’re moving from .1 to .2%,” said Saylor, who co-authored a book about bitcoin last year titled “What is Money?”

Bitcoin will continue to move forward in 2024, says MicroStrategy's Michael Saylor

Novel use of cash

MicroStrategy isn’t the first company to put some of its cash pile into alternative investments, and it’s not the last to look for ways to generate outsized returns on that money. Earlier this month, GameStop gave CEO Ryan Cohen, who gained minor celebrity status as an investor, permission to use company cash to purchase stock.

But MicroStrategy is unique in that it’s become viewed almost exclusively as a bitcoin holding company.

“Michael Saylor’s kind of a visionary,” said Vafi. “He saw this as an opportunity to really exploit the fact that they had a lot of cash and a pristine balance sheet and start this bitcoin treasury experiment. And it’s worked out well and so they’re continuing down that path.”

In analyzing why MicroStrategy’s stock has so dramatically outperformed bitcoin this year, Vafi described it as a “scarcity premium,” because there are limited ways for equity investors to tap the market.

That’s potentially changing in the new year, as investors gear up for a flurry of bitcoin exchange-traded funds (ETFs). Currently, there are bitcoin futures ETFs, which are comprised of contracts to buy and sell bitcoin but not of the cryptocurrency itself. And investors can buy into the Grayscale Bitcoin Trust, a fund that owns bitcoin and trades over the counter rather than on a major exchange.

Grayscale sued the SEC last year after the regulator denied its application to create a spot bitcoin ETF on concerns about investor protections. In August of this year, an appeals court ruled in favor of Grayscale, a decision than many in the industry viewed as paving the way for a new crop of ETFs. Asset managers, including BlackRock, Fidelity and Invesco, have filed with the SEC for their own products. 

Vafi said the prospect of competition poses little threat to MicroStrategy.

“I call it right now a very high-class problem to a certain degree,” he said. “If a bitcoin ETF gets approved, the price of bitcoin is probably headed higher and potentially materially higher.”

MicroStrategy also presents more than just a bet on the direction of bitcoin. While ETFs are passively managed, MicroStrategy has the option to put its bitcoin holdings to work, using them, for example, as collateral to create more business opportunities.

“MicroStrategy is encouraged by the continuing maturity of the regulatory environment around bitcoin as well as the increased institutional demand that we are seeing today,” Shirish Jajodia, the company’s vice president of treasury and investor relations, told CNBC in an email. “We do believe it will have a positive impact on the adoption of bitcoin by mainstream investors as well as corporations.”

MicroStrategy’s software business is a big plus too, Saylor said on the company’s most recent earnings call. It’s a proven cash flow generator, enabling the company to buy more bitcoin, he said.

For the many investors betting against MicroStrategy, it’s been a tough year.

As of early December, crypto stock short sellers were down $6.1 billion for the year, with the rally in Coinbase hurting them the most, according to S3 Partners. In the first three quarters of the year, short sellers spent $2.19 billion covering their bets, the firm said, with the majority of the buying in Coinbase and MicroStrategy.

Short sellers this year have lost $4 billion on Coinbase and $1.4 billion on MicroStrategy, according to data provided by S3 last week. Some 23% of MicroStrategy’s shares available to the public are shorted, S3 said, which is second highest among crypto companies, behind only bitcoin miner Marathon Digital. The average for U.S. stocks is 5%.

MicroStrategy shows no signs of slowing down when it comes to snapping pu bitcoin. The company said it purchased roughly 16,130 bitcoins in November for over $593 million, even with the price continuing to rise. That’s more bitcoin than it’s bought in any full quarter since the first three months of 2021.

— CNBC’s Kate Dore contributed to this report

WATCH: Bitcoin bounces back above $43,000

Bitcoin bounces back above $43,000: CNBC Crypto World

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Week in review: The Nasdaq’s worst week since April, three trades, and earnings

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Week in review: The Nasdaq's worst week since April, three trades, and earnings

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Too early to bet against AI trade, State Street suggests 

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Too early to bet against AI trade, State Street suggests 

Momentum and private assets: The trends driving ETFs to record inflows

State Street is reiterating its bullish stance on the artificial intelligence trade despite the Nasdaq’s worst week since April.

Chief Business Officer Anna Paglia said momentum stocks still have legs because investors are reluctant to step away from the growth story that’s driven gains all year.

“How would you not want to participate in the growth of AI technology? Everybody has been waiting for the cycle to change from growth to value. I don’t think it’s happening just yet because of the momentum,” Paglia told CNBC’s “ETF Edge” earlier this week. “I don’t think the rebalancing trade is going to happen until we see a signal from the market indicating a slowdown in these big trends.”

Paglia, who has spent 25 years in the exchange-traded funds industry, sees a higher likelihood that the space will cool off early next year.

“There will be much more focus about the diversification,” she said.

Her firm manages several ETFs with exposure to the technology sector, including the SPDR NYSE Technology ETF, which has gained 38% so far this year as of Friday’s close.

The fund, however, pulled back more than 4% over the past week as investors took profits in AI-linked names. The fund’s second top holding as of Friday’s close is Palantir Technologies, according to State Street’s website. Its stock tumbled more than 11% this week after the company’s earnings report on Monday.

Despite the decline, Paglia reaffirmed her bullish tech view in a statement to CNBC later in the week.

Meanwhile, Todd Rosenbluth suggests a rotation is already starting to grip the market. He points to a renewed appetite for health-care stocks.

“The Health Care Select Sector SPDR Fund… which has been out of favor for much of the year, started a return to favor in October,” the firm’s head of research said in the same interview. “Health care tends to be a more defensive sector, so we’re watching to see if people continue to gravitate towards that as a way of diversifying away from some of those sectors like technology.”

The Health Care Select Sector SPDR Fund, which has been underperforming technology sector this year, is up 5% since Oct. 1. It was also the second-best performing S&P 500 group this week.

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People with ADHD, autism, dyslexia say AI agents are helping them succeed at work

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People with ADHD, autism, dyslexia say AI agents are helping them succeed at work

Neurodiverse professionals may see unique benefits from artificial intelligence tools and agents, research suggests. With AI agent creation booming in 2025, people with conditions like ADHD, autism, dyslexia and more report a more level playing field in the workplace thanks to generative AI.

A recent study from the UK’s Department for Business and Trade found that neurodiverse workers were 25% more satisfied with AI assistants and were more likely to recommend the tool than neurotypical respondents.

“Standing up and walking around during a meeting means that I’m not taking notes, but now AI can come in and synthesize the entire meeting into a transcript and pick out the top-level themes,” said Tara DeZao, senior director of product marketing at enterprise low-code platform provider Pega. DeZao, who was diagnosed with ADHD as an adult, has combination-type ADHD, which includes both inattentive symptoms (time management and executive function issues) and hyperactive symptoms (increased movement).

“I’ve white-knuckled my way through the business world,” DeZao said. “But these tools help so much.”

AI tools in the workplace run the gamut and can have hyper-specific use cases, but solutions like note takers, schedule assistants and in-house communication support are common. Generative AI happens to be particularly adept at skills like communication, time management and executive functioning, creating a built-in benefit for neurodiverse workers who’ve previously had to find ways to fit in among a work culture not built with them in mind.

Because of the skills that neurodiverse individuals can bring to the workplace — hyperfocus, creativity, empathy and niche expertise, just to name a few — some research suggests that organizations prioritizing inclusivity in this space generate nearly one-fifth higher revenue.

AI ethics and neurodiverse workers

“Investing in ethical guardrails, like those that protect and aid neurodivergent workers, is not just the right thing to do,” said Kristi Boyd, an AI specialist with the SAS data ethics practice. “It’s a smart way to make good on your organization’s AI investments.”

Boyd referred to an SAS study which found that companies investing the most in AI governance and guardrails were 1.6 times more likely to see at least double ROI on their AI investments. But Boyd highlighted three risks that companies should be aware of when implementing AI tools with neurodiverse and other individuals in mind: competing needs, unconscious bias and inappropriate disclosure.

“Different neurodiverse conditions may have conflicting needs,” Boyd said. For example, while people with dyslexia may benefit from document readers, people with bipolar disorder or other mental health neurodivergences may benefit from AI-supported scheduling to make the most of productive periods. “By acknowledging these tensions upfront, organizations can create layered accommodations or offer choice-based frameworks that balance competing needs while promoting equity and inclusion,” she explained.

Regarding AI’s unconscious biases, algorithms can (and have been) unintentionally taught to associate neurodivergence with danger, disease or negativity, as outlined in Duke University research. And even today, neurodiversity can still be met with workplace discrimination, making it important for companies to provide safe ways to use these tools without having to unwillingly publicize any individual worker diagnosis.

‘Like somebody turned on the light’

As businesses take accountability for the impact of AI tools in the workplace, Boyd says it’s important to remember to include diverse voices at all stages, implement regular audits and establish safe ways for employees to anonymously report issues.

The work to make AI deployment more equitable, including for neurodivergent people, is just getting started. The nonprofit Humane Intelligence, which focuses on deploying AI for social good, released in early October its Bias Bounty Challenge, where participants can identify biases with the goal of building “more inclusive communication platforms — especially for users with cognitive differences, sensory sensitivities or alternative communication styles.”

For example, emotion AI (when AI identifies human emotions) can help people with difficulty identifying emotions make sense of their meeting partners on video conferencing platforms like Zoom. Still, this technology requires careful attention to bias by ensuring AI agents recognize diverse communication patterns fairly and accurately, rather than embedding harmful assumptions.

DeZao said her ADHD diagnosis felt like “somebody turned on the light in a very, very dark room.”

“One of the most difficult pieces of our hyper-connected, fast world is that we’re all expected to multitask. With my form of ADHD, it’s almost impossible to multitask,” she said.

DeZao says one of AI’s most helpful features is its ability to receive instructions and do its work while the human employee can remain focused on the task at hand. “If I’m working on something and then a new request comes in over Slack or Teams, it just completely knocks me off my thought process,” she said. “Being able to take that request and then outsource it real quick and have it worked on while I continue to work [on my original task] has been a godsend.”

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