Drastically emerging as a strong and dominant player in the AI race, Microsoft stock (NASDAQ:MSFT) is one company many investors are looking to add to this year. The company has touted more strategic investments in AI than many of its peers, showcasing an acquisition strategy that is the envy of many of its competitors.
However, plenty of risks loom on the horizon, from the potential for a shift in power in the White House to other regulation and macroeconomic risks. Let’s dive into whether Microsoft stock is worth buying as we head into what could be a volatile end to the year.
Microsoft Cautions of Political Concerns
Microsoft recently cautioned that China plans to disrupt elections in the US, South Korea, and India using AI-generated content following a test during Taiwan’s presidential election. The tech giant’s threat intelligence team report highlighted Chinese state-backed cyber groups targeting high-profile elections in 2024, with North Korea also in the fray. The Microsoft team anticipates Chinese and North Korean cyber actors targeting elections in India, South Korea, and the U.S. this year.
While the immediate impact of any move by foreign actors may be limited, Microsoft noted China’s increasing use of AI in content creation and its potential effectiveness over time. The company highlighted China’s previous attempt to manipulate the Taiwan presidential election through AI-generated content as evidence of this evolving tactic.
Moreover, Microsoft stock indicated in a blog post that this may aim to gather voting demographic insights ahead of the U.S. Presidential election. Examples included discussions on bipartisan bills and incidents like losing an F-35 fighter in South Carolina. This coincided with findings that Microsoft’s errors enabled Chinese cyber operators to breach senior US officials’ email accounts. The U.S. and U.K. also accused China-backed hackers of a prolonged cyber campaign.
Partnership with Cloud Software Group
Cloud Software Group Inc. and Microsoft Corp. deepened collaboration with an eight-year strategic partnership, enhancing Citrix virtual application and desktop platforms. Cloud Software Group pledged $1.65 billion to Microsoft’s cloud and generative AI capabilities. This revitalizes the enduring alliance between Citrix and Microsoft, offering tailored solutions and expert guidance for customers’ cloud journeys.
Additionally, Citrix will leverage Azure as its preferred cloud solution, integrating Azure Virtual Desktop and Windows 365. This partnership also facilitates modern procurement options through Azure Marketplace for Citrix solutions.
Sridhar Mullapudi, Citrix’s General Manager, emphasized empowering employees with secure, innovative solutions amid evolving work models. The partnership with Microsoft enhances productivity and innovation. Hector Lima, Citrix’s Chief Revenue Officer, highlighted the simplification of licensing to improve solution accessibility.
Cloud Software Group’s engineering teams deployed GitHub Copilot to boost developer productivity. Spotfire, a Cloud Software Group business unit, introduced Spotfire Copilot on Microsoft Azure OpenAI for faster data analysis.
MSFT Stock Remains a Solid Bet
With a $10 billion investment in OpenAI, Microsoft is confidently making progress in AI. Known for its groundbreaking and impressive AI chatbots, the company has revealed a $100 billion investment in a data center specifically for AI software creation. This investment surpasses its total capital spending in the past four years.
In terms of the company’s AI-related catalyst, Microsoft stands as a potential winner in the margin expansion era we’re seeing with such names. However, unlike other companies that may not be able to grow into their multiples, I think Microsoft certainly has what it takes to validate this current stock price over time.
I think a fundamental case can be made for buying MSFT stock at 38-times earnings, given the company’s massive investments in high-growth initiatives. In short, Microsoft’s growth story is far from over. This company has a number of levers to pull to get to the next level of growth, something many in the market are questioning right now.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.