Microsoft Stock Is Falling but AI Spending Still Points to Long Term Upside

Artificial intelligence is moving from buzzword to real-world infrastructure, and investors are looking for clear ways to get exposure as inflation trends, central bank signals and energy geopolitics keep markets on edge. The AI Stocks screener focuses on companies directly tied to the ChatGPT and AI build out, including semiconductors, software, LLMs, cloud and broader digital transformation. This targeted universe can help you focus on businesses at the heart of AI spending rather than guessing across the whole market. In this article, you will see 3 of the most compelling stocks from this screener to consider for further research.

Microsoft (MSFT)

Overview: Microsoft is a global technology company that provides cloud infrastructure through Azure, productivity software like Microsoft 365 and Teams, business applications such as Dynamics 365 and LinkedIn, and consumer products including Windows, Xbox and Surface devices.

Operations: Microsoft generates about US$135.3b from Productivity and Business Processes, US$128.4b from Intelligent Cloud and US$54.6b from More Personal Computing, with revenue broadly split between the United States (US$162.8b) and other countries (US$155.4b).

Market Cap: US$2.9t

Microsoft sits at the center of AI and cloud spending, with Azure, Copilot and its enterprise software stack tightly linked and supported by high margins and strong free cash flow. The stock has fallen sharply even as earnings and net profit margins remain strong. Simply Wall St’s estimate of fair value is well above the current price, which some investors view as an opportunity. At the same time, heavy AI data center capex, significant insider selling and active antitrust and cloud regulation probes mean the story is not risk free. For investors willing to weigh those trade offs, the full picture on Microsoft is far more detailed than headline AI enthusiasm or short term volatility suggests.

Microsoft’s high margin AI and cloud engine, combined with a Simply Wall St fair value estimate above the current share price, suggests something important may be missing from the consensus story. To explore this further, start with the 5 key rewards and 1 important warning sign

Tenable Holdings (TENB)

Overview: Tenable Holdings is a cybersecurity company that helps organisations find and fix weaknesses across their IT, cloud, identity, AI and operational technology systems, so they can see their full attack surface in one place rather than through separate tools. Its platforms, including Tenable One, Tenable AI Exposure, cloud and identity products, are used worldwide by enterprises and government agencies to assess vulnerabilities, prioritise risks and support compliance.

Operations: Tenable generates about US$1.0b in revenue from Security Software & Services, with roughly US$539.2m from the United States, US$283.8m from Europe, the Middle East and Africa, US$118.6m from Asia Pacific and US$80.7m from other Americas markets.

Market Cap: US$4.4b

Tenable Holdings gives you direct exposure to the rising need for AI aware cyber exposure management, as companies and governments grapple with larger attack surfaces, stricter regulations and new AI driven threats. The business is moving toward profitability, with earnings and return on equity expected to improve from current losses. Large platforms such as Tenable One and Hexa AI, along with recent OpenAI and Claude partnerships, are intended to support bigger, longer contracts and deeper customer relationships. At the same time, reliance on public sector budgets, higher risk external funding and intense competition from larger platform providers mean execution needs to stay tight. To see how these strengths and risks balance out, investors will want to understand the detailed assumptions and scenario work behind analysts’ expectations for Tenable’s growth, margins and valuation.

Momentum in AI exposure management is building around Tenable Holdings, but the real question is how that potential lines up against expectations on growth, margins and valuation in the analyst forecasts for Tenable Holdings

Allegro MicroSystems (ALGM)

Overview: Allegro MicroSystems designs and manufactures sensor and power integrated circuits that help control motion, manage power, and improve energy efficiency in systems such as electric vehicles, industrial automation equipment, AI data centers, robotics and energy infrastructure.

Operations: Allegro MicroSystems generates about US$890.1m in revenue from designing, developing, producing and distributing integrated circuits, with sales spread across Greater China (US$249.4m), Other Asia (US$158.0m), Japan (US$150.9m), Europe (US$120.6m), South Korea (US$78.0m), the United States (US$91.4m) and Other Americas (US$41.8m).

Market Cap: US$10.2b

Allegro MicroSystems provides focused exposure to the building blocks of EVs and AI infrastructure, where its sensor and power ICs are used in vehicle electrification, ADAS features and content in data center cooling, robotics and automation. Analyst commentary currently highlights expectations of fast growth in earnings and revenue, supported by improving gross margins, a richer mix of higher value products and indications that inventory corrections are easing. At the same time, the stock carries clear pressure points, including high valuation multiples, current losses, reliance on external funding, heavy automotive exposure and meaningful insider selling. A key question for investors is whether Allegro’s competitive position in auto and AI centric markets is sufficient to offset these risks and the expectations already reflected in the market price.

Allegro MicroSystems’ accelerating role in EVs and AI infrastructure could mean current expectations are only part of the story, but the real tension sits in the analyst forecasts for Allegro MicroSystems

The three stocks covered here are just a starting point, with the full Artificial Intelligence/ AI Stocks screener surfacing 201 more companies with equally compelling stories tied to chips, software, LLMs, ChatGPT and cloud infrastructure through the Artificial Intelligence/ AI Stocks screener. Use Simply Wall St to identify, analyze and filter for the specific catalysts and narratives that matter to you so you can focus on the AI stocks that best fit your highest conviction views.

Take Control of Your Investment Journey

If Tenable Holdings or any of these companies have caught your attention, register for FREE with Simply Wall St and add your companies to a Watchlist to monitor the share price against the fair value and track any new developments as they happen. Once you've made your move, manage your holdings with our Portfolio Command Center that filters out the noise to deliver only the most critical, actionable updates. Throughout your journey, our Community allows you to filter the best ideas from thousands of investor perspectives. By uncovering hidden catalysts and risks early, you'll accelerate your decision-making and stay one step ahead of the market.

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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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