Artificial Intelligence (AI) is the biggest trend driving gains in the stock market since the current trend began bull market in October 2022. Companies have collectively added trillions of dollars to their market cap thanks to the massive growth in AI spending and capabilities generative artificial intelligence unlocks. But the AI boom may still have a long way to go.
According to forecasts from Bloomberg Intelligence, generative AI cloud infrastructure could grow to a $470 billion market by 2032, with an average growth of 30% from 2022. Meanwhile, analysts expect software spending on things like specialized AI assistants and workflow improvements will grow by 71% per year to a combined amount of $318 billion.
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High expectations for growth across the technology industry have caused some stocks to rise in price, but there are still plenty of opportunities for investors. With just $500, you can buy any of the following stocks at a price that’s more than reasonable. As AI spending continues to rise, these stocks should all benefit.
Microsoft‘S (NASDAQ: MSFT) Early investments in generative AI pioneer OpenAI put the company in a prime position to benefit from growth in AI spending across both cloud infrastructure and enterprise software.
The company’s Azure AI service provides developers with access to leading major language models, including GPT-4o, on cloud infrastructure. It counts more than 60,000 customers for the service, up 60% year-over-year in the most recent quarter.
Management also notes that the average customer also spends more. That helped drive Azure revenue to 33% year-over-year revenue growth.
Management believes there is much more growth ahead. It predicts an acceleration in Azure’s revenue growth as more of its capital investments come online in 2024, and it adds more capacity to meet growing demand for its AI cloud infrastructure services.
Meanwhile, Microsoft’s AI agent, Copilot, is seeing strong adoption across its enterprise software suite. The Github Copilot, which helps software developers write code and improve workflows, is the most widely used AI development tool. It pushed Github to $2 billion in revenue last quarter.
Microsoft has since adapted Copilot for general knowledge work in Microsoft 365, and it has seen rapid adoption. The number of people using it daily has doubled consecutively over the past quarter.
Microsoft’s stock, at the time of writing, is trading at about 32 times analyst expectations for 2025 earnings. That’s certainly a premium price, but Microsoft has several factors supporting that level. Not only is it a leading AI company on two fronts, but it also uses billions of dollars of free cash flow every quarter to buy back shares, making future profits more valuable to long-term shareholders. With the stock price currently around $420, there is still time to buy this AI giant.