From Nasdaq Inc.:

OpenAI launched its latest version of ChatGPT, sparking increased investor interest in AI. Microsoft and Alphabet emerged as leaders in the category, with Microsoft reporting 18% revenue growth, boosted by intelligent cloud segment and Azure revenue which was up 30%. Despite solid numbers, Microsoft stock declined 0.3% in after-hours trading. Meanwhile, Alphabet delivered strong figures for the fourth quarter in fiscal 2023, with ad revenue declining slightly below expectations, resulting in a 6% drop in stock price after hours.

Microsoft outshined Alphabet in their head-to-head comparison and emerged as the better AI stock to buy. The company led the charge with AI-powered Copilot and diversified product range. Microsoft’s AI-driven six percentage points of revenue growth in Azure has demonstrated its strength in the field. On the other hand, despite its AI capabilities, Alphabet lacks the strategy and applications to fully leverage generative AI and is reliant on ad revenue, a business that has not significantly benefited from AI.

Microsoft’s stock is more expensive than Alphabet, but it is the better AI stock to buy due to its promising long-term prospects with the new technology. Both Microsoft and Alphabet saw strong stock-price appreciation last year, and despite similar growth on the top and bottom lines in the recent quarter, Microsoft appears to have the edge with its strong AI strategy.

Alphabet is no slouch in AI, but the Google parent appears to be losing out to Microsoft, making the latter the smarter investment. When analyst teams have a stock tip, it pays to listen, and currently, Motley Fool Stock Advisor has revealed Microsoft to be among the top ten stocks to buy.



Read more: Microsoft vs. Google: Which Is the Better AI Stock to Buy Now