Building Long-Term Wealth: Why Amazon and Microsoft Lead the AI Revolution

The AI Opportunity Hiding in Plain Sight

Artificial intelligence has emerged as the defining growth engine of the technology sector, yet most investors chase unprofitable, single-product companies or firms with bloated valuations. The smarter approach? Look beyond pure-play AI startups and focus on established tech behemoths that are embedding AI capabilities into products people already rely on daily. This is where Amazon and Microsoft operate—both companies function as the foundational infrastructure providers for AI while simultaneously distributing these capabilities through trusted platforms. The result is a dual advantage that positions them as compelling stocks to buy now for long-term growth.

The Cloud Computing Advantage: AWS and Azure as AI Catalysts

Amazon’s transformation into a profit powerhouse centers on Amazon Web Services (AWS), its cloud division that now generates more operating income than its celebrated e-commerce arm. In Q3, Amazon reported $180.2 billion in total revenue (up 13% year-over-year), but the real story lies within AWS. Cloud service revenue expanded 20.2% to $33.0 billion—an acceleration compared to the 17.5% growth recorded in the previous quarter. More tellingly, AWS segment operating income reached $11.4 billion, representing two-thirds of the company’s total operating profits.

Microsoft’s cloud infrastructure play through Azure tells a similarly bullish story. The company’s most recent quarter showed revenue climbing 18% year-over-year to $77.7 billion, with operating income surging 24% to $38.0 billion. Azure and related cloud services demonstrated even sharper momentum, advancing 40% year-over-year—up from 39% growth in the preceding quarter. This acceleration underscores how corporate demand for AI computing continues to expand across industries.

Massive Capital Deployment: A Vote of Confidence

Both companies are committing extraordinary resources to capitalize on this opportunity. Amazon’s free cash flow declined to $14.8 billion from $47.7 billion year-over-year, primarily due to a staggering $50.9 billion surge in capital expenditures devoted to data centers and infrastructure buildout. Meanwhile, Microsoft deployed $34.9 billion in capital expenditures during its fiscal first quarter alone, with management signaling that spending will rise sequentially throughout the fiscal year—a rate of increase exceeding prior-year levels.

These massive investments reflect genuine conviction. Microsoft’s commercial remaining performance obligations (RPO)—essentially committed future revenue—surged 50% to exceed $400 billion, providing visibility into sustained demand for the company’s cloud and AI services.

Company-Wide Integration: AI as Competitive Multiplier

What distinguishes these two stocks to buy now from other AI plays is the systematic integration of artificial intelligence across their entire business ecosystems, not just within cloud divisions. Amazon’s leadership emphasized this strategy during earnings, with CEO Andy Jassy noting that “AI drives meaningful improvements in every corner of our business.” Similarly, Microsoft has embedded AI features into Office, Teams, and other productivity tools that serve hundreds of millions of users globally.

This approach creates a powerful virtuous cycle: companies secure market dominance through superior infrastructure, then leverage that dominance to distribute AI tools that drive customer stickiness and unlock new revenue streams.

The Valuation Trade-Off and Risk Considerations

The trade-off is straightforward: both companies command premium valuations. Amazon trades at a forward price-to-earnings ratio of 29, while Microsoft sits at 30—hardly bargain territory. The fundamental risk is straightforward: if their massive capital expenditure programs fail to generate expected returns, earnings growth could disappoint, pressuring share prices downward.

For investors considering these stocks to buy, position sizing becomes critical. The high valuations coupled with execution risk warrant cautious allocation rather than aggressive overweighting. However, history suggests that companies investing heavily in genuine infrastructure advantages often reap substantial rewards.

The Bottom Line

Amazon and Microsoft represent a unique combination: established, highly profitable enterprises gaining new growth layers through strategic AI integration. Rather than betting on speculative startups, investors gain exposure to AI through companies with proven business models, fortress balance sheets, and dominant market positions. For those seeking long-term wealth accumulation through technology exposure, both stocks to buy now offer compelling risk-reward profiles—provided investors maintain appropriate position sizes aligned with their risk tolerance.