Just two months remain in 2023 — a year that will likely go down in history as a pivotal period in the rise of artificial intelligence (AI). As impressive as recent leaps forward for the technology have been, this incredible shift is just getting started.
If you’re on the hunt for top investment opportunities that can help you profit from this world-changing tech trend, buying these two stocks looks like a great move this November.
1. Microsoft
Microsoft (MSFT 1.29%) could be the strongest overall player in AI right now. Not only does the company already have leadership positions in many key AI categories, but its competitive advantages are set up to keep getting stronger from here on out.
For starters, the company’s Azure cloud infrastructure service emerged as one of the top destinations for building, launching, and scaling artificial intelligence applications.
Revenue for Azure and other cloud services rose 29% year over year in the first quarter of its 2024 fiscal year (ended Sept. 30). Growth in the period actually accelerated from the 26% sales increase posted in the preceding quarter, and management noted that the outperformance was driven by higher-than-anticipated demand for AI-related projects.
In addition to its strong position in the cloud infrastructure services space, Microsoft is also a leader in enterprise productivity software. This competitive advantage gave the tech giant an excellent foundation to make moves in the AI-powered personal assistant space.
The company recently began rolling out its Copilot personal assistant for enterprises, and it’s already seeing very encouraging results. Over 37,000 organizations signed up for the early access business version of Copilot, and 40% of Fortune 100 companies are already on board with the service.
Beyond these forefront AI initiatives, Microsoft also has leading positions in operating system software, video games, and other categories. Almost every conceivable area of its business stands to benefit from AI integration.
The company’s wide breadth of offerings gives it multiple ways to win with AI. Nearly all of the company’s products and services will also be sources of data that can be fed into algorithms and used to drive advancements capable of creating benefits across its ecosystem. Microsoft’s early AI lead should become even more entrenched with time.
2. CrowdStrike
While cybersecurity providers use AI to fend off threats, cybercriminals also use AI to build and deploy attacks.
As the leading provider of cloud-based protection software for computers, mobile devices, servers, and other endpoint devices, CrowdStrike (CRWD 2.98%) already has a big data advantage compared to its competitors. The significance of its ability to gather, analyze, and adapt to threat data will likely become even more pronounced as bad actors ramp up their use of generative AI and other advanced technologies to carry out attacks.
CrowdStrike’s sales increased 37% year over year to reach $731.6 million in the second quarter of its 2024 fiscal year (ended July 30). Profitability once again took another major leap forward, with non-GAAP (adjusted) earnings per share jumping roughly 106% year over year.
CrowdStrike estimates the total addressable market (TAM) for its existing portfolio of cybersecurity services at $76.1 billion this year. The company expects that the TAM for these offerings will grow at a 13% compound annual growth rate through 2025, reaching $97.8 billion at the end of the projection period.
However, the business appears poised to take some major steps into new service offerings, and it’s very likely that AI will be at the center of pushing the business forward and into new directions. After factoring in upcoming initiatives, new product launches, and other cloud security opportunities, the company expects that its TAM will explode to $158 billion in 2026.
The long-term growth outlook for the cybersecurity industry is incredibly promising, and CrowdStrike’s strengths in adaptive AI technologies position the company to continue gaining market share and score big wins in new categories.
Keith Noonan has positions in CrowdStrike. The Motley Fool has positions in and recommends CrowdStrike and Microsoft. The Motley Fool has a disclosure policy.
