Sales of AI-generating software could surge 6,260% by 2032. 1 Unstoppable Artificial Intelligence (AI) Stock You Should Buy Before That Happens (Hint: Not Nvidia)

Artificial intelligence (AI) has been spreading rapidly since the beginning of last year, and the benefits are clear. These generative AI algorithms take artificial intelligence to the next level by creating original text, images and video with a few simple prompts. This allows users to simplify mundane and time-consuming tasks and increase productivity. As the old saying goes: “Time is money”, companies are eager to implement new generation systems.

There is no argument about this Nvidia(NASDAQ: NVDA) has already benefited from this paradigm shift as a leading supplier of processors and other hardware used to power artificial intelligence. This led to four consecutive quarters of triple-digit revenues year over year AND earnings growth, dividend increases and an upcoming 10-to-1 stock split.

However, the market is looking to the future, and investors are already starting to anticipate the coming wave of AI software adoption. Sales of artificial intelligence software are expected to grow 6,260% to $318 billion by 2032, according to Bloomberg Intelligence.

It’s clear that Nvidia will continue to profit from its gold-standard AI processors, but there is another company that stands to profit from the adoption of AI software.

Not your grandfather’s Microsoft

Microsoft(NASDAQ: MSFT) gained prominence with the creation of the industry-standard Windows operating system and suite of productivity-enhancing software. The company continues to make its mark with its Teams workplace collaboration platform and the Azure cloud. But perhaps the biggest opportunity will come with the spread of artificial intelligence.

While many companies are eager to pursue AI, Microsoft was one of the first to recognize the transformative potential of generative AI. The company first invested in ChatGPT developer OpenAI in 2019, increasing its stake to $13 billion early last year. This gave Microsoft the opportunity to integrate these advanced algorithms into many of its flagship products and services.

Perhaps the most important development was the creation of Microsoft Copilot, a growing group of AI-powered digital assistants that form the backbone of Microsoft’s AI strategy. The most famous is Copilot for Microsoft 365, which is deeply integrated with Office products. The company also developed additional Copilots for sales, service and finance positions, charging customers $30 per user per month, and there was strong interest. While management hasn’t released detailed adoption numbers, some analysts believe Copilot could generate as much as $100 billion in incremental revenue annually. It’s not everything. Microsoft recently unveiled its Copilot+ line of computers with a built-in artificial intelligence digital assistant.

As the world’s second largest cloud infrastructure provider, Microsoft is well positioned to offer AI services to its customers. This, in turn, attracts new users to its cloud offering, helping Microsoft gain market share over cloud competitors. In the third quarter of fiscal 2024 (ended March 31), Azure Cloud grew 31% year-over-year, faster than Amazon Web Services (AWS) i AlphabetGoogle Cloud, which increased by 17% and 28%, respectively. Executives noted that AI has “contributed seven points” to Azure’s growth.

In fact, in the first calendar quarter, Microsoft accounted for 25% of global cloud infrastructure spending, compared to 31% for AWS and 10% for Google Cloud. If Microsoft continues to gain ground, there could soon be a changing of the guard among cloud leaders.

The evidence is clear

Taking a step back shows that Microsoft continues to generate overall strong results. Third-quarter revenue increased 17% year-over-year to $61.9 billion, while diluted earnings per share increased 20% to $2.94. Not bad for the largest company in the world by market capitalization, at almost $3.19 trillion (at the time of writing).

Despite the company’s foundational place in the AI ​​software revolution, Microsoft shares currently trade at 36 times forward earnings, an attractive price relative to the opportunity.

Generative AI is already sweeping the business world, but it is still in the early stages of implementation. Microsoft’s strategy to develop a suite of AI-powered Copilots was nothing short of brilliant, allowing the company to benefit from continuous AI adoption. That’s why it’s worth buying Microsoft.

Is it worth investing $1,000 in Microsoft now?

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Suzanne Frey, an Alphabet executive, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Danny Vena holds positions at Alphabet, Amazon, Microsoft and Nvidia. The Motley Fool covers and recommends Alphabet, Amazon, Microsoft and Nvidia. The Motley Fool recommends the following options: long $395 Microsoft calls in January 2026 and short $405 Microsoft calls in January 2026. The Motley Fool has a disclosure policy.