Microsoft’s AI Potential

It’s not every day you come across a prospect as promising as Microsoft’s stake in the artificial intelligence industry. As the company expands its integration of AI-related services into multiple platforms, it’s hard to deny that Microsoft is positioned to capitalize on a multitude of multibillion-dollar markets in the AI space. From services in the cloud to workplace collaboration tools and gaming, Microsoft is poised to tap into several lucrative AI-created markets, with the cloud AI market alone expected to catapult from $42 billion in 2022 to an astronomical $887 billion by 2032. And with Microsoft’s Azure already commanding a substantial 22% of the global cloud infrastructure service market, it’s evident that the company is primed to seize a significant share of the incremental growth opportunity on offer. Moreover, the company’s cloud-based AI services are already gaining remarkable traction, as CEO Satya Nadella recently underscored that “more than 18,000 organizations now use Azure OpenAI service, including new-to-Azure customers.”

What’s more, Microsoft has its sights set on the emergent generative AI-powered video gaming market, having announced a partnership with Inworld AI in November to provide a platform for game developers and creators to leverage generative AI in crafting scripts, narratives, and characters. Considering that generative AI-focused video gaming spending is projected to surge from a mere $190 million in 2022 to a staggering $69 billion in 2032, this presents a tantalizing opportunity for Microsoft.

The adoption of Microsoft’s AI services has already initiated substantial growth for the company, with revenue forecasted to accelerate following a 7% increase in the last fiscal year to $212 billion. All signs point to Microsoft being well-equipped to ride a massive AI-fueled wave of growth in the coming decade. Hence, investors eyeing an AI stock for the long haul should undoubtedly consider Microsoft for their portfolios.

Palantir Technologies’ AI Trajectory

Palantir Technologies, a company renowned for its provision of software platforms to U.S. government agencies and the intelligence community, is another entity primed for accelerated growth, particularly in light of its emphasis on AI. While it still relies substantially on government contracts for its revenues, the company has been making notable strides in the AI realm, securing significant contracts from the U.S. Army and the U.S. Special Operations Command, together totaling more than $700 million. Government spending on AI in the U.S. surged by 61% from fiscal 2020 to fiscal 2022, reaching $2.3 billion, a promising indicator of the government’s commitment to AI.

Notably, Palantir has also seen commercial customers tapping into its AI prowess, with the company reporting tripling the number of Artificial Intelligence Platform (AIP) users in the last quarter alone, boasting nearly 300 distinct organizations utilizing AIP since its launch five months ago. As it stands, Palantir holds a dominant position in the AI software platform market, which was valued at $14 billion in 2021 and exhibited impressive growth of 37% that year, according to IDC. With a third-party estimate also predicting the AI software platform market to grow at a notable pace, it’s evident that Palantir is well-positioned to benefit from the burgeoning AI landscape.

Predictions are a dime a dozen, but when it comes to Palantir Technologies (PLTR), it’s hard not to get excited. With an annual growth rate set to hit a whopping 31% through 2030, the company is projected to generate an eye-popping $279 billion in annual revenue. If these forecasts materialize, it could mark one of the most astonishing growth stories in modern corporate history.

While 2023 is likely to see a healthy 17% jump in revenue to $2.22 billion, the real excitement lies in the projected growth of 85% in earnings over the next five years. Even with a more conservative 40% growth in store for the subsequent five years, earnings could surge to $1.35 per share by 2029. This is the kind of growth that turns heads and demands attention.

By using the Nasdaq-100 as a benchmark for the tech sector and applying its forward earnings multiple of 29, we can estimate a forecast stock price of $39 based on the projected earnings per share. This would represent a staggering 144% leap from current levels, painting a picture of a stock poised for unprecedented growth.

When you consider Palantir’s position in the rapidly expanding market for AI software platforms and its ever-growing customer base, it becomes clear that the company is in a prime position to exploit this opportunity. Such potential indicates that Palantir has what it takes to be a top growth stock for the next decade. As a result, investors may be wise to consider securing their stake before this rocket of a stock accelerates even further following its stellar gains last year.