Amazon (AMZN) is emerging as a stronger investment in the AI sector compared to Microsoft (MSFT), despite both companies underperforming the S&P 500 over the past five years. Amazon’s stock has gained 14% year-to-date, while Microsoft has seen a 12% decline. Amazon’s significant investments in AI, particularly through its Amazon Web Services (AWS), are beginning to yield substantial returns, with a projected $15 billion annual revenue run rate for AI services by Q1 2026. This momentum is further supported by a recent multibillion-dollar deal with Meta Platforms for access to Amazon’s Graviton chips.
In contrast, Microsoft faces challenges as its AI initiatives, particularly the Copilot tool powered by OpenAI, struggle to gain traction among commercial users. With only 3% of its Office customers adopting Copilot, concerns are growing about its competitive position in the AI landscape.
As both companies prepare to report earnings on April 29, Amazon’s clearer path to profitability in AI makes it a more attractive buy for investors compared to Microsoft, which may need to reassess its AI strategy.
Source: fool.com