3 AI stocks led by Microsoft stock worth a closer look

Artificial intelligence is currently at the center of global markets, impacting everything from semiconductors and cloud computing to software and large-scale language models such as ChatGPT. Demand for AI-related chips and computing power continues to shape trade flows, especially in regions such as China, while bond yields, energy prices, and inflation expectations continue to fluctuate across regions. AI Screener focuses on companies directly involved in this transformation and helps filter through the noise. In this article, we highlight three stocks from the AI ​​Stocks screener to demonstrate how investors are exposed to this theme in a variety of ways.

Celebrite DI (CLBT)

overview: Cellebrite DI builds software that helps law enforcement, government agencies, and businesses collect, decode, analyze, and manage digital evidence across phones, computers, drones, and other connected devices to investigate legally recognized crimes ranging from child exploitation to financial fraud.

operation: Cellebrite DI currently generates approximately US$496.4 million in revenue from its Internet software and services business.

Market capitalization: 4 billion dollars

Cellebrite DI sits at the intersection of AI, cloud, and public safety, turning vast digital trails from mobile devices, drones, and online platforms into usable evidence for over 7,000 law enforcement organizations. The company’s business is largely subscription-based, with a focus on AI tools like Genesis and Pathfinder designed to reduce research time and increase customer trust. At the same time, a very high P/E, dependence on US federal contracts, and recent insider selling indicate that expectations are very high and any failure in execution can quickly impact sentiment. For investors looking at AI software beyond big tech, Cellebrite DI offers a combination of mission-critical demands for rapid product development, expanded use cases, and further research.

Cellebrite DI sits at the intersection of AI tools, subscription software, and public safety all, but the real story may lie in the headline P/E and under contract. See how 3 key rewards and 1 important warning sign are reshaping the risk-reward balance that investors are missing.

Microsoft (MSFT)

overview: Microsoft is a global software and cloud company with products such as Windows, Office, and Xbox, as well as the Azure cloud platform and a growing suite of AI services that power everything from workplace productivity to gaming and healthcare partnerships.

operation: Microsoft generates approximately US$135.3 billion from productivity and business processes, US$128.4 billion from intelligent cloud, and US$54.6 billion from More Personal Computing, with revenue split approximately evenly between the United States and the rest of the world.

Market capitalization: 2,860.7 billion USD

Microsoft has been at the center of AI infrastructure spending, investing tens of billions of dollars in data centers while still posting strong revenue growth, high margins, and substantial free cash flow, supported by Azure, Microsoft 365, and an extended OpenAI partnership through 2032. This combination of scale, cash generation, and multiple competitive advantages around cloud, productivity software, and embedded AI tools makes the current valuation and P/E ratio look more interesting, especially after the stock’s recent underperformance relative to the broader U.S. market. At the same time, high capital expenditures, regulatory scrutiny of cloud and licensing practices, insider sales, and financing structures that rely on external borrowing rather than deposits are key risk factors. Many investors may be focusing on the AI ​​opportunity without fully considering how these variables impact Microsoft’s long-term risk-reward trade-off in an AI-focused portfolio.

Microsoft’s AI and cloud engine are powerful, but the real story may be how its current P/E ratio and cash generation stack up against risks that rarely get top dollar in the headlines. For complete context, see Microsoft’s analysis report.

Baidu (BIDU)

overview: Baidu is a Chinese internet and AI company headquartered in Beijing that operates search and content platforms such as Baidu App and iQIYI, as well as AI cloud, self-driving, digital human livestreaming, and AI assistant businesses such as ERNIE Bot.

operation: Baidu generates about C$103 billion from Baidu General Business and about C$26.3 billion from iQIYI, with most of its C$128.7 billion in revenue coming from the People’s Republic of China.

Market capitalization: 40 billion USD

From ERNIE-powered search and cloud services to Apollo Go autonomous ride-hailing and iQIYI streaming, Baidu brings first-hand experience to China-focused AI at a time when core AI revenue growth and international partnerships are paramount. However, execution risks are real as the company has struggled with recent very low net income, a large one-time loss of C$16.5 billion, significantly lower revenue year-over-year, and a complete reliance on external debt for financing. As Baidu continues to invest heavily in AI agents, digital humans, and global robotaxis trials, the gap between the company’s ambitious AI strategy and today’s profitability squeeze may be a key focus for investors looking to take a closer look.

While Baidu’s AI story may appear to be stalled by a close margin and a CA$16.5 billion loss, the real question is whether the current price reflects the full picture of one important reward and two important warning signs.

The three AI stocks mentioned in this article are just a glimpse of what’s happening around chips, cloud, software, and large-scale language models. Our complete Artificial Intelligence/AI Stock Screener reveals 201 more companies directly involved in building ChatGPT and AI. Use Simply Wall St to identify specific triggers and stories that are important to you, then analyze and filter those AI stocks to create a more rigorous list of the highest-conviction ideas that fit your unique approach.

Take control of your investment journey

If Cellebrite DI or one of these companies has caught your attention, register for free on Simply Wall St and add your company to your watchlist to monitor the stock price relative to fair value and track any new developments. Once migrated, manage your holdings with a portfolio command center that filters out the noise and delivers only the most important and actionable updates. Our community allows you to filter the best ideas from thousands of investor perspectives throughout your journey. Discover hidden catalysts and risks early to accelerate decision-making and stay ahead of the market.

Searching for new alternatives to these AI stocks

New stock buzz breaks out, momentum shifts, and once-quiet charts start flying without most investors even noticing. These candidates are currently under the radar, so consider investigating them.

• Look through our list of Healthy Balance Sheets and Fundamentals (47 results) and look for early share price strength in companies with healthy balance sheets. This provides a deeper understanding of how financial resilience is reflected in valuations.
• Track income opportunities that may have been overlooked as yields fluctuate by reviewing eight hand-picked dividend fortresses and evaluating their payout stability and coverage.
• Although these mining stocks are not as widely known, by checking out the top 8 copper producing stocks, we highlight resource producing stocks that could benefit if demand tightens.

This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.

Do you have feedback on this article? Interested in its content? Please contact us directly. Alternatively, email editorial-team@simplywallst.com.