Microsoft Stock and 2 AI Names Backed by Cloud Demand

Global inflation pressures and higher energy costs are pushing central banks toward tighter policy, which keeps borrowing costs elevated and rewards productivity gains. Investors are increasingly looking for businesses that can do more with less. Artificial intelligence sits squarely in that story. This article walks through 3 stocks from an AI Stocks screener that focuses on chips, software and cloud tools tied directly to the ChatGPT and AI wave.

The stocks covered below are just a small sample, and the full screen surfaced 203 more companies with equally clear links to the ChatGPT and AI trend that are not discussed here. To go straight to the source and identify your own highest conviction ideas, analyze the Artificial Intelligence/ AI Stocks screener.

Overview: Microsoft is a global technology company best known to consumers for Windows, Office and Xbox, while for businesses its key role in the AI/ChatGPT story runs through Azure cloud, Azure OpenAI Service and Copilot tools that embed large language models directly into everyday workflows.

Operations: Microsoft generates about US$140b from Productivity and Business Processes, about US$138b from Intelligent Cloud and about US$54b from More Personal Computing. Revenue is roughly split between the United States at about US$171b and other countries at about US$161b.

Market Cap: US$3.6t

Microsoft provides exposure to a broad AI stack, from Azure OpenAI infrastructure to Copilot inside Microsoft 365 and GitHub, supported by high profitability and a large cloud backlog that underpins AI related demand. The company is investing heavily in data centers, GPUs and in house Maia AI chips, which raises questions about payback timing but also reflects strong customer interest in AI workloads. Regulators are examining cloud and Copilot bundling, so pricing and integration could face some limits. Investors tracking this may see a combination of significant AI related business drivers, balance sheet strength that supports substantial investment and a stock that is positioned as a quality leader rather than a speculative name.

Microsoft’s AI push runs on huge cloud and productivity franchises, yet the real story sits in how those pieces fit together financially. Get the full picture in the analysis report for Microsoft

Overview: Oracle is an enterprise software and cloud company whose Oracle Cloud Infrastructure and AI services host large language models, power generative AI tools and embed AI directly into Fusion business applications and its Autonomous Database, alongside a broad suite of ERP, HCM, database and industry specific solutions for global customers.

Operations: Oracle generates about US$58.5b from Cloud and software, around US$5.7b from Services and roughly US$3.1b from Hardware.

Market Cap: US$421.9b

Oracle provides direct exposure to the AI infrastructure build out through OCI and hosted LLMs, while also tying that compute back into day to day workflows through AI infused Fusion applications and the Autonomous Database. The large AI related contract backlog and multicloud partnerships with players such as OpenAI, Google and AWS indicate that enterprises are committing budgets to run AI workloads on Oracle. At the same time, heavy debt use, significant data center capex and questions about how quickly those contracts convert into cash flow mean the stock carries execution risk. For investors seeking AI exposure beyond the major hyperscalers, that combination of opportunity and balance sheet pressure may make Oracle worth a closer look.

Oracle’s AI backlog and multicloud partnerships could be masking a much bigger shift in its cloud story. See how debt, data center spend and contract conversion really stack up in the 4 key rewards and 3 important warning signs (1 is major!)

Overview: Alphabet is the parent company of Google, earning most of its money from Search, YouTube and other Google Services. Google Cloud provides AI infrastructure, Vertex AI and Gemini tools that help enterprises build and run large language model and ChatGPT style applications.

Operations: Alphabet generates about US$367.1b from Google Services, around US$77.6b from Google Cloud and roughly US$1.5b from Other Bets.

Market Cap: US$4,200.2b

Alphabet provides exposure to both the cash rich Google ad and YouTube business and the AI focused Google Cloud platform that powers enterprise LLMs via Vertex AI and Gemini. Strong profit margins and high returns on equity support this AI buildout. At the same time, the company is committing very large sums to data centers, its own TPU chips and cloud capacity, which has already pushed free cash flow negative in some quarters and is being partly funded with new debt. With a large cloud backlog, growing Gemini deployments in sectors like finance and law, and ongoing regulatory and competition risks, Alphabet presents a mix of AI exposure and capital intensity that may appeal to investors who closely monitor how quickly those AI investments translate into durable cash flows.

Alphabet’s AI buildout and ad engine could be telling two different stories. See how cash, capex and AI demand intersect in the Alphabet financial health report

Seeking Fresh Alternatives Beyond AI?

Markets can change quickly, and today’s quiet tickers may receive more attention in the future. Identify momentum while it is still under the radar. Consider researching these themes early.

• Look for income-oriented companies with regular payouts using the 12 dividend fortresses.
• Monitor developments in digital assets with the curated 20 cryptocurrency and blockchain stocks while the theme continues to evolve.
• Explore suppliers of key minerals with the focused 28 best rare earth metal stocks.

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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