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AI-Driven Data Centers: The Two Stocks That Could Power Your Portfolio

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  Published in Stocks and Investing on Sunday, November 23rd 2025 at 9:50 GMT by The Motley Fool

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AI‑Driven Data Centers: The Two Stocks That Could Power Your Portfolio

In a world where the next wave of innovation is being built on top of silicon, two tech giants are positioned to reap the rewards of a data‑center‑first AI revolution. A recent article on The Motley Fool outlines why “Microsoft” (MSFT) and “Amazon” (AMZN) are the prime candidates to invest in right now.

The AI‑Data‑Center Imperative

The article opens with a concise snapshot of the AI landscape. AI models, especially large‑language models (LLMs) and generative art engines, now require terabytes of data, petaflops of processing power, and an infrastructure that can deliver that power 24/7. The result is an unprecedented “data‑center‑first” era, in which companies that own, operate, or lease the physical space that houses AI workloads are poised to become the real winners.

Key points highlighted:

• Scale of the AI boom – AI spend in the cloud is projected to surpass $100 billion by 2027, driven by enterprises looking to embed AI in product pipelines and consumer services.
• Data‑center economics – While the upfront capital outlay is steep (new buildings, power, cooling, network), the long‑run margins on compute services have been improving as hardware efficiency rises.
• Energy & ESG pressures – AI workloads are power‑hungry; therefore, firms that are aggressively pursuing renewable energy or carbon‑offset strategies will have a competitive advantage.

The article points readers to a companion piece on the environmental footprint of data centers, stressing that ESG considerations are increasingly influencing investor decisions.

Company #1 – Microsoft (MSFT)

Why Microsoft?

1. Azure’s AI Leadership – Azure’s AI stack—Power BI, Azure AI, and the recently launched Azure OpenAI Service—has seen explosive adoption. The article cites Microsoft’s partnership with OpenAI as a strategic moat that guarantees high‑profile AI workloads.
2. Diversified Cloud Footprint – Azure powers over 60% of Fortune 500 workloads. The article notes that this diversification means Microsoft can spread its AI compute across a vast network of data centers, reducing latency for global customers.
3. Financial Momentum – In Q4 2025, Microsoft posted a 12% YoY increase in cloud revenue, driven largely by AI services. The revenue-to-earnings ratio (P/E) of ~28 sits comfortably below the industry average, according to the piece.
4. Green Data‑Center Strategy – Microsoft has committed to carbon negativity by 2030 and is investing in renewable energy to power its centers. This aligns with the ESG narrative the article highlights.

Investment Thesis

The article frames Microsoft as a “value‑plus growth” pick. Its stable cash flow, high gross margin (~70% on cloud), and expanding AI customer base suggest that the current valuation leaves room for upside. Additionally, Microsoft’s “One Microsoft” culture fosters cross‑product innovation, meaning AI services could spill over into Office, LinkedIn, and Surface devices.

Company #2 – Amazon (AMZN)

Why Amazon?

1. AWS AI Dominance – Amazon Web Services (AWS) owns the largest share of the cloud market (~33%). The article underscores AWS’s wide array of AI‑specific services: SageMaker, Comprehend, Rekognition, and the newly released “Bedrock” platform.
2. Scale & Speed – AWS has a global network of 25 data‑center regions and 80 availability zones, allowing it to serve AI workloads at record speeds. The article highlights a recent AWS press release announcing a 1‑million‑server expansion aimed specifically at AI inference.
3. Profitability and Cash Flow – AWS’s operating margin of ~25% has steadily improved, thanks to efficient hardware procurement and software‑driven pricing models. The article cites a P/E of ~60, yet notes that the AI growth premium is still underappreciated by the market.
4. Investment in Sustainability – AWS has pledged 100% renewable energy by 2025 and is building a “Carbon‑Positive” data‑center footprint. This proactive stance on ESG mitigates regulatory risk.

Investment Thesis

The article frames Amazon as a “growth‑oriented play”. While the current valuation is high, the explosive expansion of AI workloads on AWS and the company’s ability to upsell ancillary services (e.g., IoT, edge computing) suggest significant upside potential. Amazon’s diversification into retail, logistics, and advertising also provides a cushion against cloud‑specific volatility.

Risks and Caveats

Both articles emphasize that investing in AI data‑center stocks is not without risk:

1. Capital Expenditure – Building new data‑center capacity requires $10–20 billion per year, which could strain cash flow if AI adoption slows.
2. Competition – Companies like Google Cloud, Alibaba Cloud, and emerging players such as Cloudflare’s data‑center network could erode market share.
3. Energy Prices – Rising electricity costs could squeeze margins; the article notes that both Microsoft and Amazon have hedging strategies but are still exposed to long‑term price swings.
4. Regulatory Scrutiny – Antitrust investigations and data‑privacy regulations could impact how cloud providers operate, especially when handling massive AI datasets.

The article advises that investors should monitor quarterly earnings, capital‑spending guidance, and ESG progress reports.

How to Get In

The piece concludes with actionable guidance:

• Direct Stock Purchase – For a hands‑on approach, buy MSFT and AMZN shares through a brokerage with no commission fees.
• Exchange‑Traded Funds (ETFs) – Consider a cloud‑tech ETF (e.g., Vanguard Information Technology ETF – VGT or iShares Cloud Computing ETF – CLOUD) to gain broader exposure.
• Dollar‑Cost Averaging – Investing a fixed amount monthly can reduce timing risk in a rapidly evolving sector.

The article encourages readers to keep an eye on quarterly earnings reports, specifically the “Cloud & AI” sections, to gauge how well the companies are executing their data‑center strategies.

Bottom Line

In a nutshell, The Motley Fool article presents Microsoft and Amazon as the two front‑line players riding the AI data‑center wave. Microsoft offers a robust mix of growth and stability, while Amazon brings unmatched scale and a high‑growth trajectory. Both companies have strong financials, committed to renewable energy, and possess the ecosystem breadth to turn AI into a long‑term revenue engine.

If you’re looking to add a technology catalyst that is deeply embedded in the AI ecosystem, Microsoft and Amazon could be the right pair to consider—just be sure to keep your eyes on the capital‑intensive nature of the industry and the evolving regulatory landscape.