Investors pulling back AI stocks due to market correction, but Microsoft remains strong player.

From Nasdaq: 2025-04-04 08:15:00

The Nasdaq Composite index hit a recent high on Dec. 16, 2024, but has since dropped over 14% due to economic uncertainty in the U.S. and the possibility of a recession. This puts the index in correction territory, with further declines likely.

Investors are pulling back on artificial intelligence (AI) stocks, causing drops in prices. Despite recent pullbacks, the global AI market is expected to grow significantly, with AI software and services potentially contributing $23 trillion annually to the global economy by 2040.

Microsoft (NASDAQ: MSFT) has lost 17% of its value during the Nasdaq correction but remains a strong player in the AI software boom. With growing demand for AI services in the cloud, Microsoft’s revenue in the Intelligent Cloud segment increased by 19% year-over-year, with cloud-based AI services revenue growing by 157%.

Microsoft’s commercial remaining performance obligations (RPO) jumped by 36% year-over-year, indicating strong future revenue growth potential. Analysts expect a 12% jump in earnings growth for the company this fiscal year, with Microsoft trading at an attractive valuation compared to the Nasdaq-100 index.

The cloud AI market presents a massive opportunity for Microsoft, potentially sustaining impressive earnings growth. Analysts predict a 36% stock price increase for Microsoft in the long term, with the company capable of outperforming consensus earnings estimates and receiving premium valuations for stellar long-term upside.



Read more at Nasdaq: Beyond the Correction: 1 Artificial Intelligence (AI) Stock With Long-Term Growth Potential