AI Stocks: Don’t Be a Schmuck!

Listen up, people! Building wealth in the stock market isn’t about getting lucky. It’s about spotting the obvious…like a giant, revenue-generating, profit-spewing obvious. And right now, that obvious is Artificial Intelligence. Some so-called “experts” at Morgan Stanley (fancy name, right?) think we’re still in the first inning of this whole AI thing. First inning! Like we’re just warming up the bullpen! They’re predicting a cool $10 trillion in spending. Ten TRILLION! That’s a lot of shekels, folks. So, let’s look at two stocks that might just keep you from ending up a pauper. Don’t say I didn’t warn you.

Microsoft

Millions of people use Microsoft (MSFT +2.00%) software every day. It’s in your homes, your offices, probably even controlling your toaster oven. This isn’t a coincidence. They’ve got a stranglehold on the digital world, and now they’re monetizing AI across everything. Their cloud segment is booming – up 26% last quarter. Twenty-six percent! That’s like adding a whole new country to their empire. And it’s all thanks to AI services. They’re not just selling software anymore; they’re selling…the future! (Dramatic music swells.)

They’re investing in data centers and AI chips – specifically, something called the Maia 200. Sounds like a character from a sci-fi movie, doesn’t it? But it’s actually an AI accelerator that powers their Copilot. Copilot! It’s like having a digital sidekick…who does all the work. Azure, their enterprise platform, is up 39% year over year. Thirty-nine percent! I’m starting to think they’re printing money in there. And they’re integrating Copilot into everything – Microsoft 365, GitHub. It’s a brilliant strategy. Revenue from productivity software is up 16% – and it’s all thanks to Copilot. They’re practically giving it away, and still making a fortune. It’s highway robbery…legal highway robbery!

The stock’s forward P/E ratio of 25? Attractive. Very attractive. It’s like finding a twenty-dollar bill in your old pants. Double-digit revenue and earnings growth? That’s not a fluke, folks. That’s a sign. A sign that Microsoft is a solid investment. So, if you’re looking to make a little dough, this might be the place to start. Don’t blame me if you become filthy rich.

Broadcom

Now, when you see companies like Microsoft building bigger data centers, that’s good news for Broadcom (AVGO +7.26%). Why? Because data centers need high-performance networking to connect all those fancy chips. And Broadcom? They’re the maestros of networking. They’ve been supplying these components for years. They’re like the plumbing of the internet. You don’t think about it until it breaks, but when it works, it’s a beautiful thing.

Their industry leadership is evident in growing profits and high margins. Last quarter, they posted a 39% year-over-year increase in adjusted net income, reaching $9.7 billion. Nine point seven BILLION! That’s enough to buy a small country. And a high margin on $18 billion in revenue? That’s like finding a winning lottery ticket. It’s all driven by booming demand for their AI accelerators. They’re not just selling chips; they’re selling the brains of the operation.

Broadcom’s profitability also supports a shareholder-friendly cash return program. They paid $2.8 billion in cash dividends last quarter and have consistently increased the dividend over the last decade. They paid out half of their trailing earnings in dividends last year, bringing the current yield to 0.73%. It’s like getting paid to own the stock. What’s not to love?

The stock looks a little expensive on a trailing P/E basis, but that’s because they expect robust demand for their AI semiconductors. Analysts are forecasting 31% annualized earnings growth over the next few years. Using this year’s consensus estimate, the stock’s forward P/E of 32 looks reasonable. It should allow investors to realize solid returns. So, if you’re looking to add a little spice to your portfolio, this might be the ticket. Just don’t spend it all on borscht.

2026-02-08 21:52

Microsoft

Broadcom

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