Generative AI Software Sales Could Surge 18,647% by 2032. 1 Unstoppable Artificial Intelligence (AI) Stock to Buy Before They Do (Hint: Not Nvidia)

Generative AI Software Sales Could Surge 18,647% by 2032. 1 Unstoppable Artificial Intelligence (AI) Stock to Buy Before They Do (Hint: Not Nvidia)

Artificial intelligence (AI) has created a lot of buzz since the start of last year, and rightly so. Generative AI, which represents the cutting edge of these next-generation algorithms, can create original content, including text, videos and images, with just a few simple instructions. Perhaps more importantly, these systems can be used to streamline many time-consuming tasks, thereby increasing productivity. The opportunity to save time and money has many businesses wanting to integrate AI into their operations.

One of the biggest winners of the AI ​​revolution so far is Nvidia. From the company graphics processing units (GPUs) are the benchmark in AI. However, as Nvidia has generated gains of more than 800% since the beginning of last year, investors are scrambling to discover the next wave of stocks benefiting from the rapid adoption of AI. Many believe that the next frontier will be software. Sales of generative AI software could increase 18,647% to $280 billion by 2032, according to Bloomberg Intelligence.

Nvidia will likely continue to reap the rewards of the seeds he sowed more than a decade ago, but there is another company that has positioned itself to profit as the trend toward AI-driven software gains momentum.

Generative AI Software Sales Could Surge 18,647% by 2032. 1 Unstoppable Artificial Intelligence (AI) Stock to Buy Before They Do (Hint: Not Nvidia)

Image source: Getty Images.

Microsoft: reinvented for the 21st century

Microsoft (NASDAQ:MSFT) has made a name for itself with its Windows personal computer (PC) operating system and Web Explorer browser. The company cemented its place in technology history with the release of its Office suite of workplace productivity software.

However, over the past decade, Microsoft has transformed and expanded into a number of new markets with the creation of its Teams workplace collaboration software, acquisitions such as Minecraft and Activision Blizzard, and the launch of its “Big Three” cloud infrastructure platform. Azure Cloud.

Microsoft was also among the first to recognize the transformational opportunity represented by generative AI. Its investment and partnership with OpenAI, which began in 2019, gave Microsoft a deep insight into the future potential of AI, working on these algorithms in relative obscurity until early last year.

The fruit of this first foray into AI is Microsoft Copilot, the tech giant’s suite of AI-powered digital assistants. What started as a single tool to help developers write code became the foundation of the company’s AI strategy.

The flagship release is Copilot for Microsoft 365, which is deeply integrated with Microsoft Office, the company’s set of software-as-a-service (SaaS) offerings. Beyond that, Microsoft has developed a variety of additional co-pilots designed for specific lines of business, including sales, service, and finance.

Copilot could be a digital gold mine for Microsoft. The majority of businesses pay $30 per user per month for Copilot. For context, the company offers subscription plans ranging from $12.50 to $57 per user per month for Microsoft 365, so adding Copilot could roughly double the cost of many subscriptions.

Microsoft has so far remained tight-lipped on the details, but several analysts have weighed in, suggesting that Copilot could generate additional revenue of more than $100 billion per year by 2027.

The company is also seeing its cloud infrastructure services improve thanks to AI. During the first calendar quarter, Microsoft’s Azure cloud grew 31% year-over-year, outpacing both Amazon Web Services (AWS) and AlphabetGoogle’s Google Cloud, which grew 17% and 28%, respectively. Management also revealed that AI services “contributed seven points” to Azure’s growth.

In total, Microsoft captured 25% of global cloud infrastructure spending in the quarter, compared to Google Cloud with 10% and AWS with 31%. If current trends continue, Microsoft could eventually become the leading cloud service provider, dethroning AWS.

The proof is in the pudding

Microsoft continues to generate remarkable results, especially for a company of its size. For its fiscal third quarter (ended March 31), revenue climbed 17% year over year to $61.9 billion, while diluted earnings per share jumped 20% to 2.94 dollars.

Despite the huge opportunity ahead and Microsoft’s first-mover advantage, the stock is valued at 37 times forward earnings, which is surprisingly reasonable compared to the huge opportunity.

We’re barely a year into the AI ​​revolution, and yet the excitement about AI is palpable. Microsoft has developed a brilliant strategy to capitalize on the early stages of AI adoption, benefiting shareholders along the way. This is why the stock is a Buy.

Should you invest $1,000 in Microsoft right now?

Before buying Microsoft stock, consider this:

THE Motley Fool Stock Advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now…and Microsoft wasn’t one of them. The 10 selected stocks could produce monster returns in the years to come.

Consider when Nvidia made this list on April 15, 2005…if you had invested $1,000 at the time of our recommendation, you would have $801,365!*

Equity Advisor provides investors with an easy-to-follow plan for success, including portfolio building advice, regular analyst updates, and two new stock picks each month. THE Equity Advisor the service has more than quadrupled the return of the S&P 500 since 2002*.

See the 10 values ​​»

*Stock Advisor returns June 10, 2024

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Danny Vena holds positions at Alphabet, Amazon, Microsoft and Nvidia. The Motley Fool holds positions and recommends Alphabet, Amazon, Microsoft and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Generative AI software sales could increase 18,647% by 2032. 1 Unstoppable Artificial Intelligence (AI) Stock to Buy Before You Do (Hint: Not Nvidia) was originally published by The Motley Fool

Source Reference

Latest stories