Although it's a giant of long standing in the tech industry, Microsoft (MSFT -0.64%) is typically not a company that leaps to mind when the conversation turns to artificial intelligence (AI). Unlike pure-play AI developers, Microsoft operates a sprawling business involving traditional software, cloud services, and even hardware. But underneath it all is an AI presence that's only going to grow.
Aiming squarely at AI
In Microsoft's conference call discussing its fourth quarter of fiscal 2025 results at the end of July, CEO Satya Nadella and his fellow top executives mentioned AI no less than 37 times.
Image source: Getty Images.
The technology is obviously top of mind to Microsoft from the C-suite on down, and it's plowing gobs of capital into its development. It's a major investor in OpenAI, the developer of arguably the most well-known AI tool (ChatGPT).
In what's surely not a coincidence, it's also a frequent user of OpenAI's technology. In varied ways, it's integrating this into a range of products, most notably Copilot, the "digital assistant" easily accessible by Windows and Office 365 users. Other products and services, such as the Bing search engine, Edge browser, and the GitHub developer platform, have also received AI spruce-ups.
One business of many
The great advantage of being an AI company packed into a sprawling tech powerhouse active in many revenue-generating segments (software, video games, cloud computing, etc.) is that there isn't a compelling need for the AI operations to be profitable (in contrast to a pure-play AI business). At least, not for some time yet.
Plus, Microsoft is a cash-generating giant as it has been throughout its history. It can devote large chunks of capital to continued AI integration, and it more than has the human and operational resources to get the job done. The company might not be considered a "proper" AI stock, but it's sure plunging deep into the technology, and it's a smart (if a bit sideways) buy on the tech's future.
