By skyforbes 
Microsoft and Amazon.com
- MSFT market value: $1.9 trillion
- MSFT year-to-date performance: 16.9%
- AMZN market value: $1.7 trillion
- AMZN year-to-date performance: 3.9%
Microsoft (MSFT, $259.89) and Amazon.com (AMZN, $3,383.87) are both capitalizing on AI. For investors who want to take advantage of its growth, both AI stocks deserve a closer look.
And they’re worth looking at together because, in both cases, the opportunity comes through their cloud businesses, which increasingly rely upon artificial intelligence to deliver AI-powered computing to business, governments and institutions.
At Microsoft, it is the company’s so-called intelligent cloud segment known as Azure. And at AMZN, it’s Amazon Web Services (AWS).
Over at Microsoft, it is important to keep in mind that while Azure is just a third of the company’s revenues, it is MSFT’s fastest growing business. Azure revenues have increased 50% since 2018, versus the more pedestrian productivity and personal computing segments, which are growing, but not as fast.
By comparison, AWS constitutes just 12% of AMZN’s sales, but it is the largest contributor to the company’s operating earnings. For 2020, AWS operating income of $13.5 billion was 59% of total operating income.
Unlike MSFT, AI is not just a service for Amazon.com, but is more deeply embedded in how the company does business β impacting everything from order flow to recommendations to the conversion of Alexa commands into orders and profits.
Also noteworthy, Microsoft and Amazon have some of the strongest balance sheets among mega-techs. Together, the two companies are sitting on more than $200 billion in cash. Of course with MSFT and AMZN, there are a variety of forces impacting the businesses that go well beyond AI, and include everything from consumer sentiment to antitrust actions.
Still, for investors who want to profit from AI stocks, MSFT and AMZN offer well-funded and well-protected on ramps.