A common characteristic of very successful companies is constant innovation. Microsoft (NASDAQ:MSFT) was founded almost half a century ago. During this time, the company has evolved dramatically since revolutionizing personal computing.
Today, Microsoft operates in a variety of end markets, including cloud computing, social media, gaming and, of course, artificial intelligence (AI).
Although investors have countless options for investing in these areas, I would argue that Microsoft is one of the few options that is actually successful in all of the markets in which the company operates. Additionally, as the AI revolution ushers in a new chapter in Microsoft’s life cycle, I think the company is well-positioned to continue its dominance.
An ecosystem like no other
I bet when you think of Microsoft, the first thing you think of is associating the company with its Windows operating system. While this was the spark that started Microsoft’s magical run in the 1990s, the company has made many interesting moves since then.
In the mid-2000s, Microsoft made a series of high-profile acquisitions designed to diversify its business. The company spent billions on services like Skype and Yammer – both of which previously served as complements to Microsoft’s existing productivity tools in the Office suite.
However, in recent years, Microsoft has transitioned from personal computing to more cloud-based operations. While this has served Microsoft well, as AI becomes more widespread across the Microsoft ecosystem, a new story is beginning to unfold.
A long-term story that is just beginning
One of the things that makes Microsoft so compelling is the company’s constant pursuit of growth. In other words, Microsoft isn’t resting on its laurels. Rather, the company has repeatedly shown that it uses solid liquidity reserves to strengthen existing product lines.
Amid the AI euphoria, Microsoft sent shockwaves across the tech sector after a multi-billion dollar investment in OpenAI – the startup behind ChatGPT. Since partnering with OpenAI, Microsoft has integrated ChatGPT into many applications.
For example, ChatGPT can now be used in Microsoft Office tools such as Word, Excel and Teams. In addition, users can use ChatGPT on Microsoft’s social media platform LinkedIn. Additionally, the company’s Azure cloud infrastructure is arguably the most lucrative opportunity for Microsoft’s AI ambitions.
I’m not the only one optimistic about Microsoft’s prospects. The graphic illustrates Wall Street analysts’ consensus estimates for Microsoft’s sales and profits over the next few years.
With sales and profits expected to continue growing, I think long-term investors should be encouraged by Microsoft’s moves in the AI space and optimistic about the impact this technology can have on the company in the long run.
Microsoft’s future looks bright
The chart illustrates Microsoft’s total return since its IPO. The idea is that investors who have held the stock over the past few decades have been richly rewarded.
Still, I understand that holding on to a stock for so many years is easier said than done. In addition, Microsoft shares have become somewhat expensive with a price-earnings ratio (P/E) of 36.2.
Nonetheless, I see Microsoft as such a generational opportunity because I think it’s a stock you can own forever. The company offers investors a high level of exposure to many different end markets. Microsoft’s business diversification is truly unprecedented.
Still, investors need to be patient because it will take years before the company starts to grow and generate significant growth in a particular segment.
As the AI narrative continues to take hold, I think Microsoft is one of the best-positioned companies to benefit from long-term, secular tailwinds.
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Adam Spatacco has held positions at Microsoft. The Motley Fool has positions in Microsoft and recommends them. The Motley Fool recommends the following options: long $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has a disclosure policy.
A Unique Investing Opportunity: 1 Artificial Intelligence (AI) Stock You Can Buy Now and Hold Forever was originally published by The Motley Fool