When You Look Back in a Few Years, You’ll Wish You Had Bought This Unstoppable Artificial Intelligence (AI) Stock

Microsoft (MSFT -1.75%) has been in business for 50 years. Some of its most successful products — like Windows and Office 365 — have stood the test of time, with over a billion users each today. But the company is always moving forward. It has expanded aggressively into new markets, like cloud computing, gaming, and artificial intelligence (AI), to fuel its growth.

Microsoft announced its operating results for its fiscal 2025 fourth quarter (ended June 30) on July 30, and based on the 8% pop in its stock price during after-hours trading, it’s now the second company in the world to achieve a $4 trillion valuation. The stock isn’t cheap right now, but when investors look back on this moment in a few years’ time, here’s why they might wish they’d bought it.

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Copilot adoption continues to soar

Copilot is Microsoft’s AI virtual assistant, which it developed using a combination of its own large language models (LLMs) and those created by OpenAI. The chatbot is accessible for free in products like Windows, Edge, and Bing, but it’s also available as a paid add-on with other products.

Businesses around the world pay for over 400 million 365 licenses for their employees, and they can now add Copilot for an additional monthly fee. It can instantly generate text and images in Word and PowerPoint, summarize emails in Outlook, and autonomously transcribe virtual meetings in Teams, giving employees a major productivity boost.

Microsoft says hundreds of thousands of organizations have adopted Copilot for 365. They are also quickly expanding their usage — during the fourth quarter, banking giant Barclays rolled Copilot out to 100,000 employees after initially testing it with 15,000. Companies like Adobe, KPMG, and Pfizer also purchased over 25,000 licenses each during the quarter.

Copilot for 365 could eventually generate billions of dollars in annual recurring revenue for Microsoft, but it also presents several other opportunities. Microsoft offers a platform called Copilot Studio, which allows businesses to create custom AI agents to automate repetitive tasks or even handle customer service inquiries. Around 3 million agents were created on Copilot Studio during fiscal 2025, so usage is off to a red-hot start.

Then there is Dragon Copilot, which is an innovative AI solution for healthcare providers. The platform was used to document over 13 million doctor-patient encounters during the fourth quarter, a staggering sevenfold increase from the year-ago period. It has saved one customer — Mercy Health — over 100,000 hours so far across 1,000 of its physicians, and it will now expand Dragon Copilot to all 5,000 of its doctors.

Azure cloud revenue just grew at the fastest pace in three years

Azure is Microsoft’s cloud computing platform that offers hundreds of solutions to help businesses thrive in the digital age, whether they need simple website hosting, complex tools for data analytics, or anything in between. Azure also provides developers with all the ingredients they need to create AI software.

Microsoft CEO Satya Nadella says the company operates over 400 data centers spread across 70 regions of the world, and every single one of them under the Azure banner is now AI-first. In other words, they are fitted with the latest AI chips from suppliers like Nvidia, which gives developers sufficient computing capacity to train and deploy AI models.

Microsoft also launched Azure AI Foundry earlier this year, which combines several tools onto one platform to help businesses manage their AI journeys more efficiently. They can use it to create their own AI chat applications, build custom agents, generate content, extract useful insights from their data, and more.

Foundry processed a staggering 500 trillion tokens during fiscal 2025, which was up sevenfold from the amount Microsoft processed in the prior year (before the platform officially existed). To put it more simply, consolidating multiple Azure AI tools onto one platform is encouraging higher usage compared to when they were available as stand-alone products.

Azure’s revenue soared by 39% year over year during the fourth quarter, which was the fastest pace in three years, driven by incredible demand for data center capacity and platforms like Foundry.

Microsoft stock could be a great long-term buy

Microsoft generated $13.64 in earnings per share (EPS) during fiscal 2025, which places its stock at a price-to-earnings (P/E) ratio of 40.8. That’s a 21% premium to its 10-year average of 33.6, and it’s also much higher than the P/E ratio of the Nasdaq-100 index, which is currently 32.7.

In other words, Microsoft stock isn’t cheap right now, so investors seeking short-term gains might be left disappointed. However, longer-term investors can still do very well if they buy the stock today, despite its elevated valuation.

Microsoft’s order backlog from customers who are waiting for additional data center capacity to come online jumped 37% during the fourth quarter to a record $368 billion. Around $129 billion is expected to convert into revenue over the next 12 months, while the remaining $239 billion is set to be recognized beyond 12 months. Crucially, the latter portion increased by 49% year over year, suggesting customers are making extremely long-term spending commitments with the company.

This will support further rapid growth for Azure and the Microsoft Cloud business more broadly. So, even though Microsoft stock may be expensive today, its current price may seem like a bargain when we look back on this moment in a few years.

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe, Microsoft, Nvidia, and Pfizer. The Motley Fool recommends Barclays Plc and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.