Got $5,000? 2 Growth Stocks Building the Software Backbone of Artificial Intelligence (AI).
Chips get the headlines, but Microsoft and CrowdStrike sell the software that puts AI to work and keeps it secure.
Artificial intelligence, or AI, has become a lucrative market for companies involved in chip manufacturing and data center development. However, AI requires software to function, making software stocks essential investments in the AI industry's growth.
Two standout software companies that could benefit from the AI boom are Microsoft (MSFT) and CrowdStrike (CRWD). These firms approach AI from different angles, yet both are experiencing rising demand for their products. For someone with a budget of $5,000 to invest, splitting the funds equally between these two software giants could be a wise decision.
Microsoft offers a wide range of popular software programs, including Word, Excel, PowerPoint, and Outlook, all available in its Microsoft 365 suite. Additionally, the company's Azure cloud platform provides the necessary infrastructure for developing and running AI applications. Microsoft's Azure AI Foundry offers tools for developers to build AI applications, while GitHub Copilot assists in writing code.
The company's investments in AI have paid off, with Azure and cloud services revenue growing 48% year-over-year in Microsoft's Q1 2027. Microsoft has also integrated Copilot into its 365 suite of office tools, with daily Copilot users increasing nearly 50% sequentially and more than fivefold year-over-year.
CrowdStrike, on the other hand, focuses on cybersecurity services that become increasingly crucial as AI applications gain access to sensitive systems and information. The company's Falcon cybersecurity platform addresses the risks associated with AI agents, which can access sensitive data and perform tasks autonomously. CrowdStrike's AI detection and response (AIDR) market is expanding rapidly, with revenue increasing 26% year-over-year in its Q2 earnings.
Annual recurring revenue (ARR) reached $5.84 billion, up 25%, while net new ARR jumped 51% to $333 million. CrowdStrike's Falcon Flex subscription model allows customers to upgrade their security services, providing additional revenue streams.
Both Microsoft and CrowdStrike have proven that businesses are willing to pay for their respective AI services. This presents a compelling argument for long-term investors, as the demand for AI infrastructure and security is likely to continue growing.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
