Artificial intelligence is still buzzing, but some big names haven’t taken off like rockets. Are these AI stocks just taking a breather, or is something else going on? Let’s dive in.
Key Points
- Microsoft is betting big on its partnership with OpenAI and growing its Azure cloud computing platform.
- Meta Platforms is seeing increased user engagement and ad revenue thanks to AI investments.
- Both Microsoft and Meta are trading at attractive valuations compared to their growth potential.
- These companies are positioned to benefit from the continued expansion of AI over the next decade.
Microsoft: Cloud Growth and AI Copilots
Microsoft (MSFT) was early to the AI game. The stock might seem like it’s lagging, but it’s attractively valued.
It’s trading around 25 times its projected earnings for fiscal year 2026 (ending June 2026). That drops to under 22.5 times for fiscal 2027 estimates. The price-to-earnings ratio (P/E) is a valuation method comparing a company’s stock price to its earnings per share.
Azure’s Edge
Microsoft owns roughly 27% of OpenAI and has first dibs on its tech until 2032. OpenAI has committed $250 billion to using Microsoft’s Azure cloud platform. Azure’s been growing like crazy, with revenue up 30% or more for ten straight quarters, including a 39% jump last quarter.
The growth of Microsoft’s AI assistant, Copilot, is another key driver. Copilot seats jumped 160% last quarter, and daily active users increased tenfold.
Meta: AI Boosts Engagement and Ads
Meta Platforms (META) is another AI stock that hasn’t exploded, presenting a potential long-term opportunity. Despite strong growth, Meta’s trading at just 23 times its projected 2026 earnings.
That’s a steal for a company that grew revenue by 22% last year and expects even faster growth in the first quarter. Meta is making big bets on AI, and it’s paying off. AI helps with user engagement and ad performance.
New Revenue Streams
Ad impressions went up 18% last quarter and ad prices rose 6%, driving total revenue up 24%. Meta expects revenue to grow between 26% and 34% in Q1. Plus, Meta is just beginning to put ads on WhatsApp, which has over 3 billion users.
They’re also still early in the process of building and monetizing Threads. “Meta has been investing heavily in AI, and it’s been paying off with increased user engagement and better ad conversions.”
Stocks Mentioned
What This Means For You
- Long-Term Vision: Don’t expect overnight riches. These are buy-and-hold stocks for the long haul.
- Do Your Homework: Before investing, research these companies and understand their risks.
- Diversify: Don’t put all your eggs in one basket. Spread your investments across different sectors and companies.
- Consider Dollar-Cost Averaging: Invest a fixed amount regularly to reduce risk from market volatility.
- Stay Informed: Keep up with the latest news and developments in the AI space and these companies.
Source: finance.yahoo.com
