Microsoft (NASDAQ:MSFT) The latest development, against the backdrop of Big Tech’s difficulties in proving the viability of AI, positions it solidly in the market. Despite concerns about the ability of the entire technology sector to implement massive artificial intelligence (AI) investments into tangible returns, Microsoft has shown progressiveness. This is especially true for its Azure cloud platform.

In the fourth quarter of fiscal 2024, Microsoft’s annual revenue exceeded $245 billion, representing robust 15% year-over-year growth. Crucially, Microsoft Cloud revenue exceeded $135 billion, representing 23% year-over-year revenue growth. This growth indicates the consistent execution of Microsoft’s cloud strategy, which is largely driven by advances in AI integration across the company’s services.

Microsoft’s flagship cloud computing service Azure saw accelerated market share gains driven by AI advances. The company expanded its global data center footprint, increasing the capacity critical for long-term growth. In addition, advancements such as Azure Maia include new AI accelerators from Advanced micro devices (NASDAQ:AMD) And NVIDIA (NASDAQ:NVDAThese advances underscore Microsoft’s focus on cutting-edge infrastructure to support AI-driven applications across industries, making Microsoft stock a buy during the tech industry’s major weakness.

Microsoft’s capital spending focuses on new AI data centers

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Like cloud infrastructure, the transition to AI requires capital and knowledge-intensive investments. Microsoft Cloud gross margin declined 70% year-over-year due to scaling AI infrastructure. In the second half of fiscal 2025, Azure’s growth will accelerate as heavy investments increase available AI capacity to meet growing AI demand.

In addition to the infrastructure expansion, Microsoft’s Azure AI services are also enjoying great popularity. With over 60,000 Azure AI customers, almost 60% more than last year, and increasing average spend per customer, Microsoft is effectively monetizing its AI investments. The introduction of Models as a Service and improvements to the Azure Intelligent Data Platform further cement its position as a leading provider of AI-powered solutions.

Moreover, Microsoft’s success extends beyond Azure. GitHub Copilot, an AI-powered developer tool, has seen significant industry adoption, leading to revenue growth for GitHub and increased developer productivity. Likewise, the integration of AI into Dynamics 365 and Microsoft Teams underscores the company’s focus on transforming business processes through AI-driven automation and productivity tools. The strength of Microsoft’s stock value is supported by solid performance and strategic AI investments in the face of broader industry challenges.

Microsoft’s AI growth: promise vs. profitability

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Despite Microsoft’s strong performance, challenges and potential counterarguments must be considered. The difficulties of the entire technology sector in demonstrating immediate returns on AI investments raise legitimate concerns about the long-term viability of these ventures for Microsoft.

While Microsoft has driven growth in Azure and AI services, it remains to be seen how long this growth can withstand competitive pressure. Its competitors such as Amazon (NASDAQ:Amazon), AWS and Google (NASDAQ:GOOG) Cloud is also investing heavily in AI infrastructure. This means that Microsoft must cover capital expenditures and continuously differentiate itself to maintain its market leadership.

In addition, concerns remain about the scalability of AI solutions and their profitability. Cross-industry adoption of AI is still in its infancy, so the timeline for widespread profitability remains unclear. However, Microsoft’s proactive approach to expanding its AI capabilities and leveraging its extensive customer base counteracts some of these near-term risks. The company’s diversified revenue, solid financial position, and strategic acquisitions strengthen its moat against industry headwinds.

AI growth is a long-term game

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Looking ahead, Microsoft’s strategic focus on AI integration and cloud expansion positions it well for sustained growth and market leadership. Despite pressure from competitors and industry-wide obstacles, Microsoft’s performance in the fourth quarter of fiscal 2024 underscores its innovation and product development capabilities in the AI ​​era.

Microsoft offers stability and growth potential in a volatile technology market with its strong financial fundamentals, which include double-digit revenue growth and rising cloud revenues. The company’s investments in Dynamics 365, GitHub Copilot, and Azure AI demonstrate a visionary approach to capitalize on AI-driven change across multiple industries.

Overall, Microsoft stock is a buy. In fiscal 2025, the company will continue to increase its investments in cloud and AI. Therefore, to meet the extreme long-term AI demand based on first-mover advantages like NVIDIA, Microsoft and other big tech companies, they have to sacrifice some of their bottom line (which is obvious). So, one should not panic about the short-term performance of big tech giants like Microsoft.

At the time of writing, Yiannis Zourmpanos held long positions in AMD and NVDA. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publishing policies.