The Motley Fool·2025-12-28 08:55Core Viewpoint - Nvidia and Microsoft are viewed positively by Wall Street analysts, with both companies expected to see significant upside in their stock prices due to their strong positions in the AI market [2][3]. Nvidia - Nvidia has a competitive advantage due to its leadership in GPUs and a full-stack strategy that integrates hardware, software, and networking tools essential for AI [5]. - The company has over 90% market share in data center GPUs, with sales projected to grow at 36% annually through 2033, and adjusted earnings expected to increase at 48% annually through the fiscal year ending in January 2028 [8]. - The median target price for Nvidia is $250 per share, indicating a 31% upside from its current price of $190 [7]. - Nvidia's current valuation of 47 times earnings is considered cheap given its growth prospects [8]. Microsoft - Microsoft is the largest enterprise software company globally, with a strong presence in various software verticals, including business intelligence and cybersecurity [9]. - The company has integrated generative AI copilots into its software products, leading to a significant increase in monthly active users from 100 million in June to over 150 million in September [10]. - Microsoft Azure is the second-largest public cloud provider, benefiting from its investment in OpenAI, where it holds a 27% equity stake and has exclusive rights to advanced AI models [10]. - The median target price for Microsoft is $631 per share, suggesting a 29% upside from its current price of $488 [7]. - Microsoft's adjusted earnings are projected to grow at 16% annually through the fiscal year ending in June 2027, with a current valuation of 34 times earnings [11].