The upward momentum in the market is being driven by large-cap technology firms that have demonstrated both growth and adaptability. In a landscape where technology is always evolving, these qualities are essential for maintaining long-term dominance and success.
Let's examine two leading corporations that have not only risen to become global giants but also possess promising prospects thanks to their agility and ability to seize new opportunities.
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1. Amazon
Amazon ( AMZN 0.78%) established its e-commerce empire by investing heavily in logistics and warehouse infrastructure over many years. Today, it leverages artificial intelligence (AI) and robotics to maximize the efficiency of this network. Its DeepFleet AI system now manages over a million robots throughout its fulfillment centers, with these robots performing tasks beyond simply transporting goods. Some are capable of identifying damaged items before shipment, reducing returns, and others can even perform self-repairs.
AI’s role at Amazon extends further. The company utilizes AI to determine optimal warehouse placement for products, the most efficient delivery routes, and even the precise location within large apartment complexes for package drop-offs. These advancements are resulting in faster shipping and cost reductions.
Additionally, Amazon applies AI to enhance its high-margin sponsored advertising business, enabling advertisers to more effectively reach their target audiences. This has led to significant operating leverage in its e-commerce segment, with North American operating income soaring 47% last quarter, despite revenue rising by just 11%.
Meanwhile, AWS remains a robust engine for expansion. It continues to dominate the cloud sector with nearly a 30% market share and posted revenue growth exceeding 17% last quarter. The surge in demand is fueled by customers eager to develop AI models and applications, and AWS simplifies this process with tools like Bedrock and SageMaker.
The company is also advancing in agentic AI through products like Strands and AgentCore, which empower customers to build and safely deploy AI agents. Its proprietary Trainium and Inferentia chips help lower the cost and speed up the training and deployment of these models, encouraging customers to stay on its platform.
Amazon is making substantial capital investments to expand its AI capabilities, following its tradition of significant upfront spending that pays off over time. With profit margins improving in both e-commerce and AWS still facing capacity limits, Amazon’s growth trajectory remains strong, making its stock appealing for long-term investors.
2. Microsoft
Historically, Microsoft ( MSFT 0.88%) was sometimes seen as slow to adapt, but its swift embrace of AI has proven to be a winning strategy.
The company made a significant early investment in OpenAI, granting it early access to GPT models and enabling the integration of Copilot AI assistants into its Office products. These tools are valuable for boosting productivity, and at $30 per user each month, they represent a substantial growth opportunity.
However, the primary growth catalyst is its Azure cloud platform. Last quarter, Microsoft’s cloud revenue surged 39%, and growth could have been even higher if not for capacity limitations. The company is investing heavily in additional GPUs and servers, positioning itself to capture even more demand in the future. Microsoft is also broadening its AI offerings by incorporating models from xAI and developing its own, providing customers with greater flexibility.
Microsoft’s appeal as a long-term investment lies in Azure’s rapid expansion—it is the fastest-growing among the major cloud providers and could eventually rival AWS for the top spot in cloud computing. As enterprise AI workloads increasingly migrate to the cloud, Microsoft is becoming a preferred provider for businesses seeking advanced models and scalable infrastructure.
Microsoft has shown it can pivot and innovate quickly, which is exactly what investors look for in a technology leader.
