Artificial intelligence (AI) is no longer a history theme – it is an important element of line in the greatest statements of profit and loss of the world. If you want an exhibition without betting on sales of cyclical fleas or a Moonshot application, two established platforms are distinguished: Microsoft(Nasdaq: MSFT) And Alphabet(Nasdaq: Googl)(Nasdaq: Goog).
Both convert the interests of AI to real income and benefit from enormous and diversified businesses. Their combination of scale, product width and improvement of the economy makes them simple for purchases for long -term investors looking for exposure to AI.
Here is why investors who seek to be owners of their companies benefiting from AI should consider these two technology giants before venturing into more risky rear.
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Microsoft’s latest quarter has shown exactly what investors should want to see: wide growth with AI like a key rear wind. Software and Cloud Computing Giant’s turnover increased by $ 18% to $ 76.4 billion, operating income jumped from $ 23% to $ 34.3 billion, and income from Microsoft’s cloud -based products, reached $ 46.7 billion, up 27% from one year.
The company’s “Azure and other Cloud Services” segment was a key engine of its momentum in the cloud. Income has increased by 39% exceptional, a clear signal that the IA workloads widen the Addressable Azure market and deepen customer commitments.
The scale is important, and Microsoft it. The management said that Zeure had exceeded an annual execution rate of $ 75 billion during the year 2025, up 34%, reflecting growth in all workloads. It is a powerful basis on which the company superimposes IA Services, from model training to Copilot.
But there is an important nuance with regard to the profitability of the software giant during this AI growth phase. The margins of the clouds digest the expenditure of the IA infrastructure expenses. The gross margin of Microsoft’s cloud products and services has narrowed from a percentage point from one year to 69% while the company has intensified the data centers and networking for AI. However, management has also noted gains in azure efficiency, which should help the margins to recover as the use of use and prices reflect the value of the characteristics of the AI. In other words, short -term pressure is a rational investment for the long -term unitary economy.
Most importantly, however, the fact that the company’s global cloud margin remains higher than its corporate gross margin. The rapid growth of the segment therefore leads to a sharp increase in profits.
This is the Microsoft Bull basic case in AI: a steering wheel that begins with an Azure infrastructure; Do data, security and developer services, then monets users directly via Microsoft 365 and Copilot. With two -digit high -end growth, a discipline on costs and an assessment designed to finance years of capital expenditure (CAPEX), the configuration seems favorable.
The latest alphabet results emphasize how AI can raise several profit centers at the same time. Google’s second quarter of the second quarter of the parent has increased by 14% to $ 96.4 billion, with two -digit gains in research, YouTube advertisements and subscriptions, plus 32% Google Cloud growth at $ 13.6 billion. The operating margin landed at 32.4%.
Like Microsoft, Cloud growth is accompanied by major expenses to support AI -related opportunities. Management has stressed that the annual execution rate of Google Cloud’s income now exceeds $ 50 billion, and that CAPEX will be around $ 85 billion in 2025 to meet IA infrastructure demand. Large numbers, yes. But they are associated with improving the profitability of the cloud and a commercial mixture which launches substantial money to finance it.
AI also improves the main alphabet products. Google continues to deploy IA and IA mode overviews in research, pushing more stimulating and rich results in context while preserving the AD steering wheel which finances the ecosystem. Meanwhile, YouTube continues to benefit from better tools for creators and advertisers, helped by AI.
The general thesis is the same as Microsoft: use the scale and distribution to quickly ship the AI features, then monetize on a large installed base.
What about the risk of evaluation? With Microsoft merchant at 37 times the profits and the alphabet at 21 times the profits, none of the shares are cheap. The difference compared to many small arrivals of smaller AI is durability. These are not occasional solutions; These are platforms with several ways of winning: cloud infrastructure, productivity software, developer tools, research, video and subscriptions. With the growth of revenues and two -digit operating income and workloads of AI, which is gone inside the already sticky ecosystems, long -term mathematics are still working.
For investors who wish to expose to AI with less risks, these two actions remain easy. You get the request for training and inference, the monetization of the application layer and the balance sheets to finance the next wave – all without having to predict the winning model or the next application in small groups. It is the definition of evidence in an uncertain technological cycle.
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Daniel Sparks And its customers have no position in the actions mentioned. The Motley Fool has positions and recommends Alphabet and Microsoft. The Motley Fool recommends the following options: Long January 2026 Calls $ 395 on Microsoft and Court January 2026 405 $ calls Microsoft. The Word’s madman has a Disclosure policy.
