The past 10 years have been kind to these two tech leaders. Things could look much the same through the next decade.
Artificial intelligence (AI) is taking over Wall Street. Significant advances in the technology have propelled the leaders into the spotlight, enabling them to achieve excellent financial results.
And the good news is that it’s not too late to cash in on this — far from it. AI should continue to be an important tailwind over the next decade and beyond, and picking the right stocks can help you earn superior returns.
With that as a backdrop, let’s consider two attractive AI stocks that could beat broader equities through 2035: Microsoft (MSFT 1.32%) and Meta Platforms (META +0.87%).
Image source: Getty Images.
1. Microsoft
Microsoft is one of the best AI plays for at least two reasons. First, it had the foresight many years ago to partner with OpenAI, arguably the leader in generative AI. This move has clearly been lucrative for Microsoft, which now owns a 27% share in OpenAI.
The company also holds intellectual-property rights to use OpenAI’s models — which remain some of the market leaders — through 2032. And OpenAI has committed to buy $250 billion in services from Microsoft’s cloud computing segment, Azure.
That brings us to the second reason Microsoft is one of the more attractive AI stocks: The company has established itself as a leader in cloud computing, trailing only Amazon.
This business is booming for Microsoft, and things have only gotten better over the past couple of years, thanks to the growing list of AI services it offers, which include access to OpenAI’s market-leading models.
Today’s Change
(-1.32%) $-6.31
Current Price
$472.12
Key Data Points
Market Cap
$3509B
Day’s Range
$468.27 – $478.92
52wk Range
$344.79 – $555.45
Volume
32M
Avg Vol
22M
Gross Margin
68.76%
Dividend Yield
0.90%
It’s also benefiting from its long-standing partnerships with businesses that it has offered its Microsoft Office suite to for decades. There is a level of familiarity with the company’s products and brand trust that is hard to replicate. These competitive advantages are part of the reason Microsoft continues to make significant headway in cloud computing.
How might things evolve for the company over the next decade? It should continue to capitalize on these rapidly growing markets, since many believe we are still in the early stages of cloud adoption and AI growth.
In addition to its brand name and deep corporate relationships, the company benefits from high switching costs within its Azure segment. That sets it up to perform well over the long run.
Lastly, Microsoft is an excellent dividend stock that has increased its payouts by nearly 153% over the past decade. It’s an excellent choice for AI investors, as well as for those seeking growth and income.
2. Meta Platforms
Meta Platforms’ shares fell after it released its third-quarter results. Investors were concerned about the lower-than-expected bottom-line numbers, as well as the company’s decision to increase capital expenditures (capex). However, neither of these issues is a reason to sell the stock, in my view.
The disappointing net income was due to a tax expense incurred as a result of a new law in the U.S. And the added capex could actually be a good thing, as it could put Meta Platforms in a great position to benefit from breakthroughs in AI.
That’s one of the reasons it is a great AI stock. Also, management isn’t just waiting for future breakthroughs. The company is already reaping the benefits of its work in the field, thanks to AI algorithms that are increasing engagement across its websites and apps.
Meta makes most of its revenue from ads. Demand for advertising on the company’s platforms can grow as it attracts more users or as they spend more time on its apps — or both, as it now turns out.
Today’s Change
(0.87%) $5.10
Current Price
$594.25
Key Data Points
Market Cap
$1498B
Day’s Range
$581.86 – $598.12
52wk Range
$479.80 – $796.25
Volume
21M
Avg Vol
16M
Gross Margin
82.00%
Dividend Yield
0.35%
In the third quarter, monthly active users increased 8% year over year to 3.54 billion. During the period, time spent on Facebook increased by 5%. Meanwhile, it has also improved ad conversion thanks to AI. The result: Revenue in the third quarter jumped 26% year over year to $51.2 billion.
Despite Meta shares’ recent dip, the company’s work in AI should continue having a significant impact across its entire business, driving revenue and profits — making it an attractive opportunity for investors seeking to capitalize on this fast-growing field.
