AI . intelligence unlocks. But the AI boom may still have a long way to go.
According to forecasts from Bloomberg Intelligence, generative AI cloud infrastructure could grow to a $470 billion market by 2032, with an average growth of 30% from 2022. Meanwhile, analysts expect software spending on things like specialized AI assistants and workflow improvements will grow by 71% per year to a combined amount of $318 billion.
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High expectations for growth across the technology industry have caused some stocks to rise in price, but there are still plenty of opportunities for investors. With just $500, you can buy any of the following stocks at a price that’s more than reasonable. As AI spending continues to rise, these stocks should all benefit.
Microsoft‘S (NASDAQ: MSFT) Early investments in generative AI pioneer OpenAI put the company in a prime position to benefit from growth in AI spending across both cloud infrastructure and enterprise software.
The company’s Azure AI service provides developers with access to leading major language models, including GPT-4o, on cloud infrastructure. It counts more than 60,000 customers for the service, up 60% year-over-year in the most recent quarter.
Management also notes that the average customer also spends more. That helped drive Azure revenue to 33% year-over-year revenue growth.
Management believes there is much more growth ahead. It predicts an acceleration in Azure’s revenue growth as more of its capital investments come online in 2024, and it adds more capacity to meet growing demand for its AI cloud infrastructure services.
Meanwhile, Microsoft’s AI agent, Copilot, is seeing strong adoption across its enterprise software suite. The Github Copilot, which helps software developers write code and improve workflows, is the most widely used AI development tool. It pushed Github to a $2 billion revenue ratio last quarter.
Microsoft has since adapted Copilot for general knowledge work in Microsoft 365, and it has seen rapid adoption. The number of people using it daily has doubled consecutively over the past quarter.
Microsoft’s stock, at the time of writing, is trading at about 32 times analyst expectations for 2025 earnings. That’s certainly a premium price, but Microsoft has several factors supporting that level. Not only is it a leading AI company on two fronts, but it also uses billions of dollars of free cash flow every quarter to buy back shares, making future profits more valuable to long-term shareholders. With the stock price currently around $420, there is still time to buy this AI giant.
Adobe (NASDAQ: ADBE) makes essential software for every digital creative. It’s the company behind Photoshop, Premiere Pro and Illustrator, and it develops AI models to help creatives who use the software get the most out of their tools.
Some investors worry that generative AI tools that can create images and videos could replace the need for some of Adobe’s software. But Adobe last month unveiled several improvements to its generative AI model, Firefly, that signal AI is a benefit to its business rather than a threat. For example, Firefly video generation for Premiere Pro can create commercially safe edits and fills, saving filmmakers time and resources. They don’t have to reshoot an entire scene to correct a small mistake.
Management monetizes its AI capabilities by offering tiered subscription offerings, add-ons that provide greater access to AI tools, and direct AI access with Firefly services for creatives and GenStudio for marketers.
The free Adobe Express service also integrates the Firefly model to “enable creativity for everyone,” as management says. The free service acts as a funnel to drive new customers to Adobe’s software suite, and it works well. Management says potential customers who come through Express are more likely to convert into paid subscribers.
At the time of writing, Adobe shares are trading for less than 25 times analyst estimates for 2025 earnings. That’s a great price to pay for a company that should see steady revenue growth as customers pay for its AI tools. Growing scale from its AI investments should also lead to modest margin expansion going forward, supporting strong earnings growth. Your $500 is just enough to buy one share of this stalwart software vendor that makes some of the best AI tools for its industry.
Many see the growth of AI assistants like ChatGPT as a major threat Alphabet‘S (NASDAQ: GOOG) (NASDAQ: GOOGL) core business of Google Search. But Alphabet is investing heavily in AI to ensure this doesn’t become the case.
AI overviews at the top of Google search results have led to greater user engagement and satisfaction, according to management. Other AI-powered features, like Circle to Search on Android phones and Google Lens, also drive search traffic to Search.
That’s important because generative AI could have a meaningful impact on Google’s advertising business in the long term. Google’s AI model is called Gemini, and the company integrates it into almost all of its marketing tools. Gemini helps advertisers create and test hundreds of different ads with different texts or images.
Google’s AI tools also help marketers focus their advertising budgets on better-performing ads more quickly, maximizing their spend. Finally, Google’s AI tools can help measure conversions using predictive analytics now that many users are blocking direct ad attribution from sites and apps.
Meanwhile, Google Cloud remains one of the largest public cloud providers and is benefiting greatly from the growth in AI infrastructure spending. Google Cloud revenue grew 35% in the third quarter, reaching $11.4 billion. The segment’s operating revenue grew to $1.9 billion from $266 million last year, and it still has a long way to go before it can expand its margins, based on competitor performance. That could lead to strong overall earnings growth in the coming years.
At the time of writing, Alphabet’s shares trade for just 20.3 times analysts’ 2025 earnings forecast. With the potential growth of AI-powered marketing and spending on Google’s cloud infrastructure, the company is well-positioned to to grow revenues at a strong pace that will more than justify this price in the coming years.
Analysts currently expect Alphabet’s profits to grow an average of 22% per year over the next five years, making the current price level look like an absolute steal. With $500 you could buy multiple shares of Alphabet, giving you multiple ways to invest in the future of AI.
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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Adam Levy has held positions at Adobe, Alphabet and Microsoft. The Motley Fool holds positions in and recommends Adobe, Alphabet, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.
3 No-Brainer Artificial Intelligence (AI) Stocks You Can Buy Right Now With $500 was originally published by The Motley Fool
