Spending on artificial intelligence (AI) is rising rapidly, and these blue-chip tech stocks can help you profit from it.
Artificial intelligence (AI) is creating a wave of opportunity across the economy. gartner estimates that spending on AI will reach $2.5 trillion in 2026, up 44% year over year, with early forecasts pegging it to $3.3 trillion in 2027.
microsoft (MSFT +3.28%) and oracle (ORCL 0.57%) are two technology giants with powerful AI capabilities. Microsoft is monetizing AI through everyday workflow tools, and Oracle is benefiting from the surge in AI computing demand through its cloud infrastructure. Here’s what can sustain growth for these companies over the next five years.
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1.Microsoft
Microsoft is a valuable growth stock, doubling in value since 2021, but the momentum isn’t over yet. Revenue in the most recent quarter increased 18% year-over-year, primarily driven by demand for AI capabilities in Microsoft 365 and the Azure enterprise AI platform.
Microsoft is integrating the Copilot AI assistant family across its productivity products, helping drive demand for its flagship productivity software. The Azure AI enterprise business is also growing rapidly, gaining share of the $390 billion cloud market. This growth reflects the robust cloud infrastructure that Microsoft has built to deliver cutting-edge services that enable businesses to do more with their data, including building their own AI applications.
Today’s changes
(3.28%) $14.81
current price
$465.95
Key data points
Market capitalization
$3.5 trillion
daily range
$450.53 – $471.10
52 week range
$344.79 – $555.45
volume
38M
average volume
25M
gross profit
68.76%
dividend yield
0.73%
Demand for the company’s products has led Microsoft to spend aggressively on data center expansion, which could weigh on profits. But the spending also underscored Microsoft’s financial strength, with the company generating a whopping $147 billion in cash from its operations over the next 12 months. This cash flow fuels the investments needed to advance our AI capabilities and increase our competitiveness.
The stock’s expected price/earnings ratio (PER) is 27 times, making it a reasonable price. Investors can expect the stock’s performance to closely match the company’s future growth, with analysts currently predicting 13% annualized earnings growth over the next few years.
2. Oracle
Oracle is seeing accelerating growth in its cloud infrastructure business, making it an attractive stock to buy. Companies are keen to secure the servers and chips they need to train their AI models. Oracle’s advanced database capabilities, chips, and robust AI training capabilities make it an attractive choice for these businesses.
Today’s changes
(-0.57%) $-1.02
current price
$177.16
Key data points
Market capitalization
$509 billion
daily range
$172.00 – $179.65
52 week range
$118.86 – $345.72
volume
23M
average volume
25M
gross profit
65.40%
dividend yield
1.13%
The cloud infrastructure business posted an impressive 68% year-over-year revenue increase last quarter. Although the segment accounts for only 25% of the company’s total revenue, it suggests that Oracle is well-positioned to capture a share of the $159 billion cloud infrastructure services market. According to Fortune Business Insights, this market is expected to grow approximately 13% annually through 2034.
Oracle competes with other cloud infrastructure providers such as Microsoft, but its multicloud offering is one of its differentiators. This allows businesses to run Oracle databases across multiple cloud providers. Customers appreciate this flexibility, as Oracle’s multicloud revenue grew 817% year-over-year in the most recent quarter.
Oracle’s momentum means it currently trades at an attractive forward P/E of 24x. This is an attractive valuation, considering analysts expect earnings to grow 22% per year. At a stock price like this, investors could potentially double their money in five years.
John Ballard has no position in any stocks mentioned. The Motley Fool has positions in and recommends Microsoft and Oracle. The Motley Fool endorses Gartner and recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
