Secure AI Shares Suitable for Cautious Investors, Undoubtedly Worthy of Purchase
In the dynamic world of technology, two giants continue to stand out - Microsoft and Amazon. Both companies have solidified their positions as established, large-cap companies with significant AI business segments, offering growth potential while minimising risk for cautious investors.
Last year, Microsoft's revenue topped an impressive $245 billion, with earnings of over $88 billion. The tech giant's profits increased 18% in its latest quarter, and revenue jumped 13% year over year, demonstrating a consistent growth trajectory. Microsoft's Windows operating system holds a 70% market share among desktop operating systems, further cementing its dominance.
Microsoft's investments in AI have proven fruitful, particularly with its partnership with OpenAI, the creator of ChatGPT. The company has rolled out OpenAI's GPT-4 throughout its product lineup, positioning itself at the forefront of AI-driven innovation.
Meanwhile, Amazon, the e-commerce giant, generated nearly $638 billion in revenue last year, with profits totalling over $59 billion. The company's earnings soared 64% in its latest quarter, and revenue increased 9% year over year. Amazon's market share in e-commerce stands at 37.6%, a testament to its dominance in the sector.
Amazon is leveraging AI to enhance customer experiences, with AI-powered product recommendations on its e-commerce platform. The company's cloud services arm, Amazon Web Services (AWS), is the global leader in this market, with a 29% share.
Amazon has also made significant strides in AI research, investing $8 billion in Anthropic, the developer of the powerful Claude large language model (LLM).
Both companies offer tremendous financial stability for risk-averse investors. For those seeking diversification, investing in diversified ETFs that include multiple AI-related companies can help reduce volatility risk. These ETFs or investment funds including tech giants like Microsoft and Amazon provide cost-effective diversification and risk mitigation.
Microsoft's forward earnings multiple is 33.2, while Amazon's forward price-to-earnings ratio is 34.6. Both these figures suggest that the market values these companies' growth potential highly.
Microsoft's Office 365 suite ranks No. 2 in the productivity software market, further demonstrating the company's broad reach across various tech sectors.
While both companies face significant competition and potential regulatory risks, their size, diversified business models, and commitment to AI innovation make them resilient in the ever-evolving tech landscape. For investors seeking stability alongside exposure to AI innovations, Microsoft and Amazon remain attractive options.
