Bond markets are highly sensitive to inflation data right now. Every fresh reading on prices and wages feeds into interest rate expectations, which in turn moves discount rates for long duration assets such as artificial intelligence related stocks. That creates fast changing valuations and opportunities. This article walks through three stocks tied to the AI build out that many investors are watching closely today.
The three stocks below are a small sample of the companies tied to AI that bond sensitive valuations are swinging around, and the full screen has surfaced 207 more businesses with equally compelling AI narratives that are not covered here. To see that wider field and quickly focus on the plays that best fit your thesis, head to the Artificial Intelligence/ AI Stocks screener.
Microsoft is a global technology company best known for Windows, Office and Xbox, but its most direct link to the AI theme is Azure AI and the Azure OpenAI Service, which power large language models and Copilot features for businesses. The company generates about US$140b from <a href="https://bitcomme.com/canva-expands-its-productivity-bet-with-100-visual-suite-upgrades/” title=”Canva Expands Its Productivity Bet With 100+ Visual Suite Upgrades”>Productivity and Business Processes and US$138b from Intelligent Cloud, with a further US$54b from More Personal Computing, so AI and cloud are important pieces of a broad software and services portfolio rather than the whole story. With a market cap of around US$3.7t, Microsoft is one of the largest listed companies in the world.
Investors watching the AI build out may be most interested in how Microsoft turns heavy Azure AI and data center spending into long term cash generation, using its Azure OpenAI Service and Microsoft 365 Copilot to tie AI directly into everyday enterprise workflows. At the same time, the company faces real questions, from regulatory scrutiny on cloud and software bundling to the risk that huge AI infrastructure budgets pressure margins if customer demand slows. The mix of scale, balance sheet strength and tight integration of AI across productivity tools means there is more to this AI story than the headlines about capex or hype around ChatGPT integrations suggest.
Microsoft’s AI cash engine is still taking shape, and the real story sits in how that spending shows up in the numbers. Get the analysis report for Microsoft to understand the crucial twist many investors are missing.
Oracle is a long established enterprise software and database company that now leans heavily into cloud and AI through Oracle Cloud Infrastructure, Autonomous Database and AI services that help run large language models and AI powered business workflows. The bulk of its revenue, about US$58.5b, comes from cloud and software, with smaller contributions from hardware at roughly US$3.1b and services at about US$5.7b. As a result, AI related workloads sit inside a much broader portfolio of business software and infrastructure tools. With a market cap around US$457.4b, Oracle is a large scale player in enterprise IT with growing exposure to the ChatGPT and AI build out.
Investors looking at AI infrastructure may find Oracle interesting because it aims to combine GPU rich OCI data centers, its Autonomous Database and AI agents inside Fusion and NetSuite into a single enterprise stack that can train, host and run AI models on mission critical data. The company has a very large contracted backlog tied to AI and cloud, which could support future revenue. This opportunity comes with heavy data center spending, a high debt load and pressure on cash flow as it builds capacity for customers such as OpenAI and large multicloud partners. For anyone focused on how the AI wave might play out in real world corporate systems rather than just consumer apps, the full Oracle story has several moving parts that are easy to miss at a glance.
Oracle’s contracted AI and cloud backlog hints at a different growth story compared to the headline debt and data center spending. See how the analyst forecasts for Oracle might reshape the risk reward picture investors think they understand
Alphabet is the company behind Google Search, YouTube, Android and Chrome, and it also runs Google Cloud, which sells AI infrastructure, the Vertex AI platform and Gemini models that help enterprises build and deploy large language model applications. Most of its revenue still comes from Google Services at about US$367.1b, while Google Cloud contributes roughly US$77.6b and Other Bets about US$1.5b, so AI and cloud are important growth areas rather than the main revenue engine. With a market cap of around US$4,122b, Alphabet is one of the largest listed companies globally.
Investors watching the AI build out may want to pay attention to how Alphabet turns its Gemini and Vertex AI tools inside Google Cloud into durable cash generation while its ad heavy Google Services arm continues to fund huge data center and chip spending. The company combines very high profit margins and return on equity with heavy AI infrastructure investment, regulatory and antitrust pressure and questions about whether AI search and Gemini will disrupt or deepen its ad business. The full picture of how that trade off plays out is more nuanced than headline AI hype or a simple big tech label suggests.
Alphabet’s AI push is accelerating inside Google Cloud while Google Services funds the heavy lifting. To see how the numbers could reconcile into a single story, start with the analysis report for Alphabet.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.
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You can copy Bill Ackman and buy Netflix. Knowing why you did is the hard part.
Netflix case is interesting. The scariest competitor is the one that does not need to make money. Amazon can run video at a loss forever because it is really a Prime retention tool with a content budget attached. On the other hand there is Youtube.
Pershing Square hasn’t beaten the S&P over the last five years, though the long-run record is genuinely good. I like Ackman as a person. I enjoy listening to Ackman and that’s about where it ends for me.
Mitchell Lawler
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