Beyond the Correction: 1 Artificial Intelligence (AI) Stock With Long-Term Growth Potential

Core Viewpoint - The Nasdaq Composite index has experienced a significant decline of over 14% from its recent high, entering correction territory, primarily due to rising economic uncertainty in the U.S. and a potential recession [2][3]. Company Analysis: Microsoft - Microsoft has lost 17% of its value during the Nasdaq correction, but it is positioned well to benefit from the AI software boom due to its large end markets [5][12]. - The demand for AI services in the cloud is a major growth driver for Microsoft, with its Intelligent Cloud segment revenue increasing by 19% year-over-year to over $25 billion, and cloud-based AI services revenue growing at an impressive rate of 157$298 billion, indicating a strong demand for its services that exceeds current fulfillment capacity [9]. - The company is expanding its data center capacity to meet both near-term and long-term demand, which is crucial as it builds a solid revenue pipeline [7][10]. - Microsoft offers a variety of AI models on its Azure platform, including those from OpenAI and industry-specific models, facilitating customer integration of AI into their operations [8]. - Analysts expect Microsoft's earnings growth to increase following an estimated 12% jump in the current fiscal year, with the cloud-based AI market projected to grow at nearly 40% annually through 2030 [10][11]. - Currently trading at 25 times forward earnings, Microsoft is considered an attractive investment opportunity compared to the Nasdaq-100 index's earnings multiple of 29, with potential stock price growth to $512, representing a 36% gain from current levels [12][13].