It will be one of the world’s first artificial intelligence (AI) stocks to reach $5 trillion

Microsoft (NASDAQ: MSFT) was founded in 1975, and some of its early software, like Windows and Word, are still used by more than a billion people today. But the company has since diversified into other areas like gaming, internet search, cloud computing, and now artificial intelligence (AI).

Artificial intelligence is a major new focus for Microsoft. The company is rapidly building new data centers to meet AI developers’ demand for computing power and has already launched AI software like the virtual assistant Copilot, which could be a major revenue source in the years to come.

According to tech experts and AI industry insiders, these initiatives could lead to explosive growth for Microsoft in the coming years. As a result, I predict it will be one of the first AI companies in the world to surpass a $5 trillion valuation, which is a 70% increase from its current market cap of $2.94 trillion. Here’s why.

Microsoft takes a multidimensional approach to AI

Last year, Microsoft agreed to invest an additional $10 billion in the creator of ChatGPT OpenAIand used the startup’s cutting-edge AI models — in combination with its own models — to develop Copilot. The virtual assistant is now integrated into most of Microsoft’s flagship products, including the Windows operating system, the Bing search engine, the Edge internet browser and the 365 suite of productivity apps.

Copilot for 365 allows the user to instantly create content in Word, whether it’s an article or a business proposal, and the virtual assistant can even use previous content pieces as a guide for formatting purposes. Then, that Word document can be transformed into a PowerPoint presentation with a single prompt. It’s the ultimate productivity tool, which is why organizations are signing up for it in droves.

In the fourth quarter of fiscal 2024 (ended June 30), Microsoft saw a 60% increase in Copilot for 365 customers compared to just three months earlier. The number of companies that purchased at least 10,000 Copilot seats for their employees more than doubled, and they included giants like Walt Disney And NovartisConsulting firm EY is rolling out Copilot to 150,000 of its employees.

Co-pilot costs an additional $30 per seat per month, above the cost of a 365 subscription (although it will likely be reduced for larger businesses), so Microsoft has the opportunity to create a significant amount of new revenue from its existing customers.

However, one of Microsoft’s biggest opportunities in AI lies in the cloud, primarily through its Azure platform. Microsoft is building data centers equipped with the latest chips from vendors like Nvidia And Advanced microsystemsand distributes this computing capacity to businesses via Azure, which they use to develop AI applications. Additionally, businesses can access ready-to-use AI models on Azure to accelerate their progress, including those from OpenAI.

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