1 Unstoppable Artificial Intelligence Stock to Buy With $400 Right Now

Core Viewpoint - Investors are increasingly optimistic about artificial intelligence (AI) and its potential to positively impact financial results, leading to significant investments in the sector over the past three years [1] Group 1: Investment Opportunities - Despite some stocks experiencing price surges, there are still investment opportunities available for those with smaller amounts to invest, such as under $500 for certain AI leaders [2] - Microsoft is highlighted as a strong buy opportunity following a recent sell-off after its earnings report, attributed to rising capital expenditures related to AI data center construction [3] Group 2: Financial Performance - Microsoft reported a capital expenditure of $37.5 billion last quarter, exceeding analyst expectations, which contributed to the stock's sell-off [3] - The Azure cloud computing segment achieved a 39% growth, aligning with expectations, although investors anticipated higher revenue growth alongside increased capex [4] - Microsoft's remaining performance obligations rose to $625 billion, a 110% increase year over year, with a significant portion attributed to a new deal with OpenAI [5] Group 3: Risks and Management Insights - The increased capital expenditures are expected to impact profit margins due to rising depreciation expenses, with management indicating that two-thirds of spending is on short-lived assets [4] - OpenAI represents 45% of Microsoft's backlog, introducing customer-concentration risk, but even without this deal, Microsoft has substantial growth potential [5] - The software business remains robust, with the Productivity and Business Processes segment growing 14% year over year on a constant-currency basis, despite fears of AI displacing enterprise software applications [6] Group 4: Cash Flow and Funding - The combination of high-margin software business and increasing cloud billings generates significant cash flow, which supports funding for AI data center projects, with free cash flow reported at $5.9 billion [7]