In January 2024, Office 365 quietly reached 400 million paid seats. Microsoft (MSFT 0.26%) products are as integrated into our professional lives as meetings that could’ve been emails, but these “boring” and decades-old tools are the fuel Microsoft is using to compete in the artificial intelligence (AI) race.

As AI progresses and automates away chunks of the professional world as we know it, the legacy suite of Microsoft 365 products shows no signs of slowing down. This ability to quietly and reliably generate revenue is funding Microsoft’s riskier AI bets.

Office products generated $54.9 billion in fiscal year 2024 (the 12 months ended in June 2024). That was 22% of all of Microsoft’s revenue. Microsoft 365 will keep the company on the leaderboard of AI innovators for years to come. This is great news for long-term Microsoft investors.

Microsoft’s lagging AI strategy

Microsoft is still playing catch-up when it comes to generative AI. OpenAI leads with more than 200 million weekly active users and set the gold standard with the release of ChatGPT in 2022. Alphabet‘s Google and Meta Platforms both have models nearly equivalent to OpenAI.

Compared to these companies, Microsoft got a late start in deciding on an AI strategy. However, it has since closed the gap significantly by partnering with competitor OpenAI and, as of the end of 2024, was beginning to build models in-house.

Microsoft also purchased billions in Nvidia chips and continues to innovate on its cloud computing platform, Azure, and agentic powerhouse, Copilot. These strategic moves are, thus far, keeping pace with the other major players in the AI industry.

Microsoft requires immense amounts of capital to remain competitive in the AI landscape. Fortunately, its decades-old productivity and business lines are the stable engine propelling Microsoft into its new, automated era.

The Office moat

Normally, when one thinks of a legacy business, it’s of an outdated, shrinking portion of revenue. That is not the case with Microsoft’s Office products. Microsoft 365, including the applications Excel, Word, PowerPoint, Teams, and Outlook, is still growing by double digits year over year.

This indicates these product lines are not only here to stay, but are so universally adopted by businesses and individuals alike that it’ll be nearly impossible to dethrone them anytime soon.

These products are also mostly recession-resistant, as businesses are unlikely to cut them in an economic downturn. Microsoft also switched to a subscription model more than a decade ago, making revenue from these lines of business extraordinarily predictable and dependable.

The significant growth in the legacy products is also great news for the capital-intensive investments Microsoft will need to continue making for the next several years. Microsoft reports that it’s on track to invest approximately $80 billion to build out AI-enabled data centers for training and deploying AI models and applications.

Microsoft’s AI revenue is exploding

In its earnings call on July 30, Microsoft revealed Azure’s income for the first time: a whopping $75 billion, an increase of 34%, according to chairman and CEO Satya Nadella.

The CEO added, “Cloud and AI is the driving force of business transformation across every industry and sector. We’re innovating across the tech stack to help customers adapt and grow in this new era.”

Microsoft’s market cap is approaching $4 trillion, and there seems to be quite a bit of room left for growth, particularly if the company’s big AI bets pay off.

Microsoft remains a top competitor

For investors, Microsoft remains a solid long-term play, largely because of the stable products users have known for years. With a quarterly dividend of $0.91 per share, investors are rewarded on both the value and growth side, though the dividend yield is under 1%. Microsoft’s burgeoning agentic and innovative technologies will continue to produce massive revenue alongside mature, reliable products.

Overall, Microsoft’s total revenue increased 18% from Q4 2024 to Q4 2025. There’s plenty of risk associated with investing in AI technologies, but thanks to Microsoft’s steady lines of business, the downside is far less than that of many competitors.

Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, Microsoft, and Nvidia. The Motley Fool 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.

Few stocks are as directly exposed to artificial intelligence as CoreWeave (CRWV 0.72%). The AI cloud infrastructure company reinvented itself, transitioning from a crypto mining company by repurposing its GPUs to provide AI computing power to customers like Microsoft, Nvidia, and OpenAI.

With the AI boom in full swing, that business model has led to jaw-dropping growth. In its second quarter, its revenue jumped 206% to $1.21 billion, showing how fast demand for its services is ramping up.

Now, CoreWeave just got another shot in the arm as the stock jumped 12% on Tuesday after announcing another blockbuster deal, this time with Meta Platforms (META 1.35%).

What’s happening with CoreWeave and Meta?

Meta is committing to spend up to $14.2 billion through 2032 on cloud computing capacity from CoreWeave, with an option to expand its commitment.

The deal comes at a time when Meta has been ramping up its spending on AI, seeing it as a must-win for its future. In June, Meta acquired a 49% stake in Scale AI, a data-labeling start-up, and poached its CEO, Alexandr Wang, to run its new AI lab.

On the same day that the CoreWeave news came out, Meta also announced that it’s buying the chip start-up Rivos, which designs chips based on RISC-V architecture, an alternative to those used by leading CPU architecture designers Arm, Intel, and AMD. Rivos is also expected to help Meta build out full-stack AI systems.

For CoreWeave, the deal builds on the earlier momentum it earned when it signed an expanded $6.5 billion agreement with OpenAI in September, bringing its total contract with OpenAI to $22.4 billion.

The drumbeat of positive news for AI includes rival Nebius’s $17 billion deal with Microsoft, Oracle’s huge cloud computing forecast, and CoreWeave’s own wins, including OpenAI, Meta, and a $6.3 billion deal with Nvidia, in which it will buy any of CoreWeave’s unused capacity, effectively backstopping the company’s growth.

Those news items, and improving sentiment around CoreWeave, sparked a recovery in the stock last month. After falling by more than 50% from its peak in June, CoreWeave jumped more than 50% off its lows early in September.

Is CoreWeave overvalued?

CoreWeave is a challenging stock to value. The company is delivering phenomenal top-line growth, but it’s also reporting huge losses. The company’s business model is risky. It’s borrowing billions of dollars to buy Nvidia GPUs and build out the infrastructure to provide next-generation AI computing.

That high-interest debt has also led CoreWeave to pay significant interest expense, set to be above $1 billion this year, essentially preventing CoreWeave from turning a profit.

For most stocks, to determine an appropriate valuation, you just look at the numbers. However, CoreWeave is in a class of its own. Given its growth rate, in which revenue is still tripling, the upside potential for the stock is tremendous, and conventional cloud computing businesses like Amazon Web Services and Microsoft Azure have shown how profitable cloud computing can be at scale.

Rather than parsing the numbers for CoreWeave to determine whether the stock is overvalued, investors are better off considering the future of the AI boom. If the massive capex buildout continues, including on CoreWeave’s infrastructure, the stock is a good bet to be a winner. At a market cap of $66 billion, the stock still has room to move higher.

However, if the AI boom turns into a bubble and spending suddenly slows, CoreWeave is likely to plunge. While it’s locked in multi-billion-dollar deals with the likes of Meta, the company will need more of those to turn profitable and justify its current valuation.

Either way, expect the volatility in the stock to continue.

Jeremy Bowman has positions in Amazon, Arm Holdings, Meta Platforms, and Nvidia. The Motley Fool has positions in and recommends Amazon, Intel, Meta Platforms, Microsoft, Nvidia, and Oracle. The Motley Fool recommends Nebius Group and recommends the following options: long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.

There’s no denying the trajectory of artificial intelligence (AI) over the past few years. Many of the companies that have pivoted to adopt this game-changing technology have ascended the ranks of the world’s largest companies when measured by market cap. When the stock market closed on Tuesday, there were 11 members of the vaunted $1 trillion club, the vast majority of which have significant ties to AI.

After the market close, industry stalwart Oracle (ORCL 1.37%) reported its recent quarterly results, and despite missing Wall Street’s expectations, the stock surged higher and never looked back. Why? In a stunning turn of events, the company signed numerous multibillion-dollar contracts that kicked its future growth potential into overdrive.

Given the magnitude of these deals, it seems the writing is on the wall for Oracle to join this elite fraternity. The company’s growth is at a tipping point, and management’s commentary suggests the company has a long AI-centric runway for growth ahead.

A trusted partner

Oracle holds a coveted place in the technology community, as roughly 98% of Global Fortune 500 companies make up its customer rolls. The industry stalwart provides its customers with a strategic combination of cloud, database, and enterprise software. Naturally, when the shift to AI began in earnest, this captive audience began to turn to Oracle for its expanding collection of cloud and AI solutions.

The company’s growth has been uneven, but the future looks bright. During Oracle’s fiscal 2026 first quarter (ended Aug. 31), total revenue grew 11% year over year to $14.9 billion, while its adjusted earnings per share (EPS) of $1.47 grew by 6%. Both numbers accelerated compared to Q4, but missed Wall Street’s consensus estimates, which called for revenue of $15 billion and adjusted EPS of $1.48.

However, that wasn’t the headline. Last quarter, CEO Safra Catz noted that the company had reached a “tipping point,” noting that revenue growth was accelerating, “and it’s only going up from here.”

That turned out to be an understatement. Oracle reported explosive growth in its remaining performance obligation (RPO) — or contractual obligations not yet included in revenue — which skyrocketed 359% year over year to $455 billion, up from $138 billion in Q4.

Catz explained, “We signed four multibillion-dollar contracts with three different customers in Q1,” calling the results “astonishing.” He went on to say that demand for Oracle Cloud “continues to build.” The company expects to sign “several additional multi-billion-dollar customers and RPO is likely to exceed half a trillion dollars.”

Looking to the future, Oracle is forecasting Oracle Cloud Infrastructure revenue to grow 77% to $18 billion this year — but that’s just the beginning:

• Fiscal 2027 cloud revenue of $32 billion, up 78%.
• Fiscal 2028 cloud revenue of $73 billion, up 128%.
• Fiscal 2029 cloud revenue of $144 billion, up 97%.

Mind you, this is just Oracle Cloud Infrastructure revenue, and Catz noted that “most of the revenue in this five-year forecast is already booked in our reported RPO.” That means that any future contracts will probably increase those growth targets.

The path to $1 trillion just got much shorter

Oracle is leveraging its position as a trusted partner to help customers choose suitable AI and cloud solutions and profit from the growing adoption of generative AI.

Before today’s results, Wall Street was expecting Oracle to generate revenue of $66.75 billion in its fiscal 2026 (which began June 1), giving it a forward price-to-sales (P/S) ratio of about 10. Assuming its P/S remained constant, Oracle needed to generate revenue of approximately $98 billion annually to support a $1 trillion market cap. Given those figures, Oracle could have achieved a $1 trillion market cap before 2028.

Wall Street hasn’t yet had time to update its models, but given the magnitude of the company’s results, previous forecasts are out the window. Barring unforeseen circumstances, I predict Oracle will join the $1 trillion club within the next 12 months.

Estimates regarding the market potential of generative AI continue to ratchet higher. Big Four accounting firm Price Waterhouse Coopers (PwC) calculates the opportunity could be worth as much as $15.7 trillion annually by 2030, which illustrates the magnitude of the opportunity.

Given the recent contract wins, Oracle has proven that it is leveraging its experience to profit from this windfall. The writing is on the wall, and Oracle is poised to join the fraternity of trillionaires in short order.

Danny Vena has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy.

Billionaire Steve Mandel and his hedge fund Lone Pine Capital have been a great one to follow for individual investors. Although some hedge funds have a poor record of underperforming the broader market, Mandel has substantially outperformed the market over the past three years. So, when he makes a move in his portfolio, investors should pay attention.

One thing Mandel did during Q2 was sell off some of his Microsoft shares. Although it wasn’t a massive move, the hedge fund reduced its position by about 5%. Then, Mandel used some of those funds to invest in another promising AI stock that has increased in value by nearly 800% over the past decade.

That stock? Amazon (AMZN -1.16%).

AWS is the best reason to invest in Amazon right now

Amazon may not be the first company that comes to mind when you think about AI. Instead, it probably seems more like an e-commerce investment. While that sentiment is true for the consumer-facing portion, the reality is that a large chunk of Amazon’s profits comes from AI-related revenue streams.

The biggest is from Amazon Web Services (AWS), its cloud computing arm. Cloud computing firms are having a strong year, thanks to the massive demand generated by AI workloads. Because more companies can’t justify spending millions (or even billions) of dollars on a data center dedicated to training AI models, it’s far more reasonable to rent computing power from a firm that already has the capacity. That’s the idea behind cloud computing, and it has translated into strong growth for the business unit.

In Q2, AWS’s sales rose 17% to $30.9 billion. That’s strong growth, but it is a bit slower than its peers, Microsoft Azure and Google Cloud, which each grew revenue by more than 30% in Q2. However, AWS is much larger than both of these units, so it shouldn’t surprise investors that AWS is growing at a slower rate. AWS accounted for about 18% of Amazon’s total revenue in Q2, but it made up 53% of its operating profit. That’s because AWS has far superior margins compared to its commerce business units, making AWS a critical part of the Amazon investment thesis.

AWS is experiencing a significant boost from AI, making it a strong stock pick in this space.

But Microsoft is also a solid AI pick, so why is Mandel moving from Microsoft to Amazon?

Amazon’s stock looks more promising over the long term

From a valuation perspective, both companies trade at fairly expensive levels for their growth. However, they’re both priced about the same from a forward price-to-earnings (P/E) standpoint.

AMZN PE Ratio (Forward) data by YCharts

One thing Amazon has going for it that Microsoft doesn’t is the steady upward pressure on Amazon’s margins. Thanks to AWS and its advertising service business units being the fastest growing in Amazon, its margins are steadily improving. Although Amazon’s revenue growth rate appears to be somewhat slow, its operating income growth rate is actually quite rapid.

AMZN Revenue (Quarterly YoY Growth) data by YCharts

This trend still has years to unfold, which is a solid reason to transition from Microsoft to Amazon. I believe this will be a winning trade over the long term, as Amazon’s profits are expected to grow at a significantly faster rate than Microsoft’s, resulting in the stock outperforming its peer over the long term due to their similar valuations.

However, both stocks are still solid AI picks, and you can’t go wrong with either one.

Keithen Drury has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Microsoft. The Motley Fool 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.

Apple is the world’s third-largest company by a wide margin, with a $1 trillion gap between it and fourth-place Alphabet . However, I think several companies are slated to pass Apple in market share over the next five years, including fifth-place Amazon (AMZN -0.00%), which is valued at around $2.4 trillion compared to Apple’s $3.5 trillion.

That’s a wide gap to make up in five years, but looking at Amazon’s growth tailwinds versus Apple’s makes it fairly clear that Amazon is the much better stock pick.

Amazon has two business units driving profit growth

Apple’s business is fairly straightforward; it’s the leading consumer tech brand and generates significant revenue selling iPhones and other products in the Apple ecosystem. Amazon is a bit more complex, as it has the online store that most investors are familiar with, but that’s not the best reason to invest in it.

Although its online stores division posted the best quarter in a long time (revenue rose 11% year over year), the real stars of the show are Amazon Web Services (AWS) and its advertising services division.

AWS is Amazon’s cloud computing platform, and it is seeing strong demand fueled by the migration of traditional workloads to the cloud, as well as by new artificial intelligence (AI) workloads. AWS grew revenue by 17% year over year in Q2, which is strong growth considering it generated nearly $31 billion in revenue during the quarter. However, AWS’s primary competitors (Microsoft‘s Azure and Google Cloud) posted stronger growth rates in their corresponding quarters, so investors are worried about AWS’s long-term ability to perform in this sector despite its being the market-share leader.

AWS will likely continue to underperform its peers due to its size, but 17% growth is nothing to sneer at. AWS is also a large part of Amazon’s profit picture. In Q2, it accounted for 53% of Amazon’s operating profits despite accounting for only 18% of revenue. Analysts still expect cloud computing to grow rapidly over the next few years, and if Amazon surpasses Apple in market cap, this will be a primary reason why.

Advertising services is Amazon’s fastest-growing segment, with revenue rising 23% year over year, an acceleration over previous quarters’ growth rate. Amazon has one of the most lucrative places to advertise on the internet, as consumers are already coming to their platform to make purchases. Paying to place a product at the top of an Amazon search almost guarantees increased sales. This is worth a lot to its advertising clients and will be a key part of Amazon’s investment thesis over the next few years.

Amazon’s margins are rising

Amazon isn’t a revenue growth story; it’s a profit growth story. The rise of high-margin businesses like AWS and advertising services has helped Amazon boost its profit margins over the past few years.

AMZN Profit Margin data by YCharts

With its two high-margin business segments growing faster than other parts of its business, Amazon will naturally have elevated profit growth rates. In Q2, Amazon’s operating income rose 31% year over year.

Contrast that with Apple, whose Q3 FY 2025 (ending June 28) operating income increased by 11%. Amazon’s profit growth rate is much faster. Over five years, a 30% growth rate will increase its operating income by 271% while an 11% growth rate increases operating income by only 69%.

That would be enough to drive Amazon’s profits higher than Apple’s, propelling it to surpass it in size along the way. Amazon is an excellent stock pick for the next five years and a no-brainer buy at today’s prices.

Keithen Drury has positions in Alphabet and Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, and Microsoft. The Motley Fool 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.

Alibaba Group (BABA 2.65%), China’s largest e-commerce and cloud infrastructure company, was once considered a great growth stock. From fiscal 2015 to fiscal 2022 (which ended in March 2022), its revenue and adjusted earnings per share (EPS) expanded at a compound annual growth rate (CAGR) of 41% and 21%, respectively.

That explosive growth was driven by the strength of its Taobao and Tmall marketplaces in China, the rising usage of its cloud-based services, and the expansion of its ecosystem with its smaller brick-and-mortar retail, cross-border commerce, logistics, and media segments.

Alibaba went public at $68 per American depositary share (ADS) in September 2014, and its stock more than quadrupled to a record closing price of $310.29 on Oct. 27, 2020. At the time, it seemed like one of the safest and simplest plays on China’s booming e-commerce and cloud markets.

But today, Alibaba’s stock trades at around $120. That decline was caused by two major challenges. First, China’s antitrust regulators hit its e-commerce business with a record fine in 2021 and shackled it with new restrictions. Those setbacks eroded Alibaba’s defenses against fierce competitors like PDD Holdings and JD.com. Second, the macro headwinds in China disrupted the growth of its e-commerce and cloud businesses.

From fiscal 2022 to 2025, Alibaba’s revenue and adjusted net income both grew at a CAGR of 5%. That slowdown convinced many investors its high-growth days were over, but its stock now trades at just 16 times this year’s earnings. The bulls argue that the valuation is too cheap to ignore, while the bears claim its risks justify that lower multiple. Let’s see which argument makes more sense.

Is Alibaba’s business finally stabilizing?

Over the past year, Alibaba’s revenue growth broadly stabilized, its operating margin rose to the double digits, and its adjusted EPS growth turned positive again.

Data source: Alibaba. In CNY terms. YOY = Year-over-year. Fiscal years end March 31.

For the full year, its revenue and adjusted EPS rose 6% and 5%, respectively. That still represented a slowdown from its 8% revenue growth and 14% adjusted EPS growth in fiscal 2024, but it indicated its business was gradually stabilizing.

That stabilization was supported by the growth of its overseas e-commerce marketplaces (Lazada in Southeast Asia, Trendyol in Turkey, Daraz in South Asia, and AliExpress for its cross-border purchases), which offset Taobao and Tmall’s softer growth in China; the expansion of its logistics business for third-party customers, and AI-driven tailwinds for its cloud business. It also bought back 5.1% of its shares for $11.9 billion in fiscal 2025, and it plans to allocate a lot more cash to its future buybacks.

From fiscal 2025 to 2028, analysts expect Alibaba’s revenue and EPS to grow at a CAGR of 7% and 11%, respectively. That growth should be driven by its recent catalysts, new live streaming features and more competitive discount offerings for its domestic marketplaces, and potential spinoffs or initial public offerings (IPOs) for its cloud and logistics divisions. A favorable trade deal between the U.S. and China would also alleviate some pressure on the Chinese economy and ignite fresh consumer and cloud spending.

So is Alibaba’s stock too cheap to ignore?

Alibaba’s high-growth days are probably over, and it still faces plenty of macro, competitive, and regulatory challenges. But if you expect the trade tensions to eventually ease, China’s economy to keep growing, and for Alibaba to stay at the top of its expanding e-commerce and cloud markets, then its stock seems too cheap to ignore at these levels.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool recommends Alibaba Group and JD.com. The Motley Fool has a disclosure policy.

Following a Pro Publica report that Microsoft was using engineers in China to help maintain cloud computing systems for the U.S. Department of Defense, the company said it’s made changes to ensure this will no longer happen.

The existing system reportedly relied on “digital escorts” to supervise the China-based engineers. But according to Pro Publica, those escorts — U.S. citizens with security clearances — sometimes lacked the technical expertise to properly monitor the engineers.

In response to the report, Secretary of Defense Pete Hegseth wrote on X, “Foreign engineers — from any country, including of course China — should NEVER be allowed to maintain or access DoD systems.”

On Friday, Microsoft’s chief communications officer Frank X. Shaw responded: “In response to concerns raised earlier this week about US-supervised foreign engineers, Microsoft has made changes to our support for US Government customers to assure that no China-based engineering teams are providing technical assistance for DoD Government cloud and related services.” 

These agents, to many in the tech industry, are the next evolution in our new AI-powered future, where artificial intelligence not only acts as an assistant, but can autonomously complete complex multi-step actions with just some human intervention in sensitive sectors like healthcare, and no human intervention in lower-risk areas.

But at least in the short term, the real battle between AWS and agentic AI competitors may depend less on technology differentiation, and more on who employs the most quality talent to help guide large corporations on where to even begin with AI agents.

Businesses “are frustrated because they want someone to tell them what to do and how to do it,” Dave Nicholson, chief technology advisor at The Futurum Group, told Fortune. “There isn’t enough [talent] to go around. Humans are the bottleneck.”

Nicholson added that AWS and other cloud and large tech companies will need to heavily lean on partner companies to assist with customer education and implementation too.

The business case for agents was pushed into the forefront last year by Salesforce, with the announcement of a new division it calls Agentforce. Google, OpenAI and other cloud and technology players have since rushed to announce AI agent tools and services geared toward corporations. On Thursday, a day after AWS’s showed off its agent tools, OpenAI announced a new, general purpose agent for users of its ChatGPT product.

Fear of missing out

With just about every CEO these days under pressure to craft an AI strategy, the incoming AI agents may be poised to capitalize on the situation.

“This is the highest level of ‘fear of missing out’ ever among behemoths in the IT industry right now,” Nicholson said. “These are existential decisions being made at Microsoft, Google, and Amazon.”

In an interview with Fortune after his keynote presentation announcing a new in-house collection of agent-building services dubbed AgentCore as well as a marketplace for agents, AWS VP of agentic AI, Swami Sivasubramanian said that Fortune 500 execs whose companies don’t start experimenting with the technology risk missing out on a transformational moment as pivotal as the creation of the internet.

“Agents are fundamentally going to change how we work and how we live,” Sivasubramanian said when asked how execs at Fortune 500 companies can be sure that their investments in building or deploying AI agents isn’t supplanted by a new shiny technology of the moment next year. The executive provided an example of how AI technologies will make it feasible for an agent to, for example, not only plan an itinerary for a trip, but do all of the bookings too.

“You can give it a high level objective, like, ‘Hey, create me a 10 day itinerary in December to visit Australia,’” he said. “It actually understands the objective. Breaks it down into…I need a flight, I need activities to go see in these cities, and then, based on my preferences, it creates a customized itinerary, and actually also secures reservations by calling APIs.”

That’s the type of personal, tangible, example that gives this AWS executive and other proponents of AI agents, the belief that many customer experiences can be overhauled, or created from scratch, with this technology — in ways that might even be hard to envision now.

Agentic rolemodels needed

Slick as some of these scenarios may sound however, the reality is that there are currently few examples of corporations using agents at massive scale. The green field of opportunity is sure to be attractive for some, but it’s also a big challenge for the companies selling agentic products and tools since there are not many real-world examples to guide or inspire.

Amazon Web Services’ market leadership in cloud computing should serve as some advantage, providing a large existing customer base to sell to. And because those companies’ operations are already dependent on AWS, they have more patience for any bumps Amazon experiences as it refines its AI agent business.

“They’re more likely to get two or three strikes,” Nicholson said of AWS and its AI agent rollout.

But it’s an open question whether AWS’ initial focus on heavily marketing its new agentic tools to software developers versus the executives with the purse strings will prove problematic.

“They have disjointed messaging,” Mark Beccue, an analyst at the research firm Omdia, told TechTarget. “When talking about agents, you must have the complete story.”

AWS’ Sivasubramanian said that most C-suite customers that he meets with naturally look inward to how their own organization runs when considering where and how to deploy AI agents first to help automate, or reduce the time to complete, boring, repetitive tasks.

This, of course, raises the question of when and how AI agents will disrupt or displace jobs and in which areas. Amazon CEO Andy Jassy recently weighed in on the overall AI boom in an employee memo, saying that while these technologies will both eliminate current roles while creating new ones, “we expect that this will reduce our total corporate workforce [over the next few years] as we get efficiency gains from using AI extensively across the company.” On Thursday, a day after AWS’ agent-focused summit, the company carried out layoffs of at least hundreds of employees.

A day earlier, Sivasubramanian, perhaps not surprisingly, struck an optimistic tone when discussing a new world full of AI agents that now Amazon — and many rivals — are rushing to bring to fruition.

“Yes, in the short term, if you look at [past] transformations, there were actually changes on the specific job categories [in which people worked], “but then we as humans have really adapted to these changes and then started working on different things. You don’t find people who are doing Y2K engineering anymore.”

Network platform company Arista Networks (ANET 2.38%) is the 15th best stock performer over the last 10 years, according to MacroTrends. To understand why, look no further than the company’s otherworldly growth rate: It has averaged 29% quarterly revenue growth during the past decade, according to YCharts, meaning its revenue has grown by nearly 900%.

The past decade saw a mega-trend play out in investing: Computing and software increasingly moved to the cloud, and Arista Networks was a major beneficiary of the trend. Its two largest customers — Microsoft and Meta Platforms — have spent billions of dollars building out the necessary data centers, driving strong revenue growth for Arista.

Between now and 2030, another mega-trend appears poised to play out in the investing world. Yet again, it seems that Arista Networks’ ship will sail ahead on these strong tailwinds.

The AI trend isn’t done yet

Artificial intelligence (AI) is having its moment in the limelight. Whether it’s reading AI summaries for search results, turning family photos into Ghibli-style art, or having ChatGPT give ideas for starting conversations, regular people are interacting with AI applications more and more. Businesses are also increasingly finding ways to integrate AI automation into tasks, making their operations more efficient.

However, the increasing use of AI comes at a cost. In May, the aforementioned Ghibli-style art trend overwhelmed OpenAI‘s graphics processing units (GPUs). Simply put, they were overworked, pointing to an ongoing need to build out AI infrastructure.

According to McKinsey & Company, AI infrastructure spending could hit an astronomical $6.7 trillion by 2030. That number is up for debate. But less debatable is that the cloud computing giants have already committed to spending hundreds of billions of dollars in coming years to meet surging demand for AI.

AI data centers need network solutions, which is where Arista Networks comes in. Understanding the nuts and bolts of how this space works is admittedly difficult. But suffice it to say that Arista is considered to be a leader when it comes to cloud-based network solutions, and its revenue has consequently more than tripled over the last five years as demand surged.

ANET Operating Margin (TTM) data by YCharts.

As the chart above shows, strong demand has also lifted the operating margin for Arista Networks to an all-time high. This could be reason for concern for those looking to buy the stock today. After all, if the AI trend has already experienced its fastest growth rate, then one would expect Arista’s own growth to slow and its profit margin to come back down to normal, potentially hurting the stock.

However, given the ongoing commitments to AI capital expenditures, I don’t believe Arista Networks is about to be a victim in a cyclical downtrend. On the contrary, the cycle trend still seems to be up.

Can Arista Networks’ top line double in five years?

For its part, Arista Networks estimates its market opportunity at over $70 billion. For comparison, management expects to generate $8.2 billion in revenue this year. That’s a big number, yes. But it’s still well below the size of the market opportunity, suggesting plenty of upside opportunity.

Should Arista Networks generate revenue of $8.2 billion in this coming year, it would represent 17% growth from 2024. That’s a strong growth rate, but a step back from its 20% growth in 2024. And it’s a significant drop from its five-year average of about 29% top-line growth.

Let’s assume that Arista grows by 17% in 2025, and growth thereafter slows to about 14%. This would be about half of its average growth rate over the last five years. Given the company’s leadership position in a large growing market and its long track record of taking market share, I believe these assumptions are conservative.

Under these assumptions, it’s possible that Arista Networks’ revenue could almost double by the end of 2030. Importantly, this level of growth could be enough to sustain its stellar profit margins.

Trading at 45 times its trailing earnings, Arista Networks stock isn’t cheap right now. It would have room to fall if growth stumbled by a significant amount and margins took a step back.

However, given the strong trends in the space right now, I believe Arista’s growth will likely stay strong. Should its growth rate reaccelerate within the next five years (as it’s done multiple times in the past), then perhaps revenue could more than double in the next five years.

I believe Arista Networks stock looks pricey, but that’s justified given its leadership position for an important growth trend. I expect its revenue to increase nicely and for its profit margins to stay strong, which means that its shareholders will likely enjoy many more years of positive stock returns.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Arista Networks, Meta Platforms, and Microsoft. The Motley Fool 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.