Microsoft and Amazon's AI Bets Pay Off as Earnings Revive Investor Interest

Microsoft and Amazon are two of the world's largest companies by market cap, fueling the artificial intelligence revolution with hundreds of billions in capital expenditures.

Despite concerns that strong returns on these investments may not materialize, both stocks have seen a resurgence after their latest earnings reports.

Microsoft's AI strategy is gaining traction, with paid Copilot subscribers rising by 10 million to reach 30 million total, double the net added subscribers in the prior quarter. The company's Azure cloud division also saw revenue surpass $100 billion for the first time, up a whopping 43% year over year.

Of the 35 Wall Street analysts who have issued research reports on Microsoft, 34 have buy ratings on the stock, with one recommending a hold. The average price target implies nearly 21% upside, according to TipRanks.