So, artificial intelligence. It’s rather taken off, hasn’t it? One minute we were cautiously optimistic about self-driving cars not driving into things, and the next everyone’s chatting to bots that can, well, mostly string a coherent sentence together. This sudden enthusiasm isn’t just a passing fad – it’s a genuine shift, and companies are scrambling to upgrade their digital innards to accommodate it. It’s a bit like the gold rush, only instead of picks and shovels, it’s… well, very powerful computer chips and the software to run them.
Analysts at Grand View Research reckon this AI market will grow at a rather startling rate – around 30.6% a year until 2033. That’s a lot of growth. And, as any sensible investor knows, growth is generally a good thing. Two companies, in particular, seem well-positioned to benefit from all this digital excitement: Nvidia and Microsoft. Let’s have a look at why, shall we?
Nvidia: Selling the Digital Equivalent of Pickaxes
Nvidia, for those not entirely familiar, makes graphics processing units, or GPUs. Now, for years, GPUs were mostly about making video games look pretty. Which is important, of course, but it turns out these little chips are remarkably good at other things too, like the sort of complex calculations that underpin artificial intelligence. Think of it this way: a standard computer processor is like a very efficient accountant, good at handling one task at a time. A GPU is more like a room full of accountants all working on different parts of the same problem simultaneously. Much faster, especially when the problem is, say, teaching a computer to recognize a cat in a photograph.
Remarkably, Nvidia now controls over 90% of this particular market. It’s a bit like owning the entire pickaxe factory during a gold rush. And it wasn’t always this way. They started making graphics cards for gamers, and then realized their technology was perfect for this new AI boom. Companies like Meta and Google are throwing billions at them for these data center GPUs. It’s a good business to be in. They’ve also created something called CUDA, a sort of proprietary language for their chips. It’s like building a walled garden; once you’re inside, it’s rather difficult to leave. They keep innovating too, releasing new and more powerful chips – Turing, Ampere, Hopper, Blackwell – it’s a constant stream of improvements. Analysts predict impressive growth rates – 47% revenue and 45% earnings growth annually through 2028. That’s not bad for a company trading at 27 times next year’s earnings, especially when demand continues to outstrip supply.
Microsoft’s Cloud and the AI Transformation
Microsoft, of course, is a bit of a different beast. They’ve undergone a rather impressive transformation over the last decade, largely under the leadership of Satya Nadella. They used to be, shall we say, a bit focused on desktop software. Now, they’re all about the cloud. It’s a bit like shifting from selling maps to building the roads themselves. Azure, their cloud platform, is now the second largest in the world. They’ve expanded into gaming with Xbox, and they even make Surface devices, which are… well, they’re computers. But the real magic is happening with AI.
They started investing in OpenAI, the creators of ChatGPT, back in 2019. Now they’re the biggest investor, and they’re integrating OpenAI’s technology into everything – Copilot, their AI assistant, Azure cloud services, even Microsoft 365. It’s a clever move, locking in customers and widening their competitive moat. They’re rolling out specialized AI agents for finance, legal, sales, healthcare, and engineering – it’s a broad push. And they’re even developing their own AI chips, Maia and Cobalt, which could reduce their reliance on Nvidia and improve performance. Analysts are predicting 16% revenue and 18% earnings growth annually through 2028. At 26 times next year’s earnings, it seems reasonably valued, and it’s a well-balanced play on the cloud, mobile, gaming, enterprise software, and AI markets.
So, there you have it. Two companies, both well-positioned to benefit from the ongoing AI boom. It’s a complex world, this technology business, but sometimes, the best investments are the ones that seem… well, remarkably sensible.
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2026-01-26 21:34