MSFT - This is the Best AI Stock to Buy Right Now
2024-07-09 20:30:00 ET
When investors think of artificial intelligence (AI), they likely think of Nvidia ( NASDAQ:NVDA ). However, I would argue this is no longer the best AI stock out there. That’s because even in a growing industry, there may be a limit to the company’s success.
That’s why we are going to focus on another “Magnificent Seven” stock instead. One that has proven it never stops innovating.
Make room for Microsoft
Among the AI stocks, Microsoft ( NASDAQ:MSFT ) stands out as a top choice for several reasons. Microsoft’s AI initiatives, including its partnership with OpenAI and the development of AI products like Microsoft Copilot, position it as a leader in AI transformation across various industries. Furthermore, Microsoft’s Azure is one of the top cloud infrastructure services, critical for AI applications. The company’s investment in AI-driven cloud services enhances its competitive edge.
What’s more, Microsoft has made a multibillion-dollar investment in OpenAI to accelerate AI breakthroughs. This partnership includes developing and deploying advanced AI technologies on Azure, Microsoft’s cloud platform, which serves as OpenAI’s exclusive cloud provider. This collaboration enables both companies to independently commercialize AI advancements and offers new AI-powered experiences across Microsoft’s products.
Strategic investments
But it doesn’t stop there. Microsoft stock has made key advancements through strategic investments. Microsoft announced a US$2.9 billion investment to enhance its AI and cloud infrastructure in Japan. This includes training three million people in AI skills over three years, establishing a Microsoft Research Asia lab in Tokyo, and collaborating with the Japanese government on cybersecurity initiatives.
Microsoft is also investing US$1.7 billion in Indonesia to expand AI and cloud services, aiming to equip 2.5 million people in the ASEAN region with AI skills by 2025. This includes establishing data centres and offering AI skilling programs.
Microsoft plans to establish a new data centre region in Thailand and provide AI training for over 100,000 people as well. This investment supports Thailand’s digital economy and aims to enhance AI skills in the tourism sector. And finally, a US$2.2 billion investment in Malaysia focuses on AI and cloud transformation, including skilling 200,000 people, establishing a national AI Centre of Excellence, and enhancing cybersecurity capabilities in partnership with the Malaysian government.
Growing confidence
Given all this and the company’s continued leadership role, Microsoft stock continues to gain confidence from analysts. Analysts highlight Microsoft’s extensive AI integration across its products and services. This includes significant enhancements to Microsoft Copilot, AI-first hardware innovations, and the development of cost-effective AI solutions.
Analysts from Goldman Sachs and Wedbush emphasize the substantial revenue opportunities stemming from Microsoft’s AI initiatives. The expanded Microsoft 365 Copilot market, for example, is projected to add significant long-term value. Goldman Sachs estimates the total addressable market (TAM) for Microsoft 365 Copilot at $135 billion, with potential revenue recognition of 15 to 30% by FY26.
Microsoft now enjoys a consensus “Buy” rating from the majority of analysts. The average 12-month price target for the stock is around US$467.12, with some targets going as high as US$600. This reflects a strong belief in the company’s ability to capitalize on its AI and cloud capabilities.
All in all, Microsoft stock continues to climb for good reason. Microsoft’s robust AI strategy, strong market position, and positive analyst outlook make it a compelling AI stock to consider.
The post This is the Best AI Stock to Buy Right Now appeared first on The Motley Fool Canada .
Fool contributor Amy Legate-Wolfe has positions in Microsoft. The Motley Fool recommends Microsoft and Nvidia. The Motley Fool has a disclosure policy .
2024