55,590%…
That’s how much you’d have made if you bought shares in Microsoft on
November 19, 1990, and held until today.
That’s the day the company launched a productivity software bundle that featured Excel, Word, and PowerPoint.
This was great for Microsoft’s customers. It was also responsible for windfall profits for Microsoft shareholders in the years that followed.
Had you invested $1,000 in Microsoft shares when Office hit the market, it would be worth $556,900 today, including dividends.
That’s about twice the average 401(k) balance of $232,710 for Americans aged 65 and up.
Investing in the right software can change your life. And there are good reasons for that…
Software is a high-growth business that can scale globally. Even better, software subscription services – the core of Microsoft’s business today – bring in recurring revenues and a predictable stream of income.
Software is also a high-margin business. Once you develop a piece of software, you can sell it over and over again with negligible extra costs.
Sure, Microsoft updated its Office apps many times since the 1990s. But it’s been selling essentially the same software for more than three decades now.
Luckily, you don’t need a time machine to take us back to the 1990s to profit.
Microsoft and other tech companies are releasing a new wave of AI-enhanced software. And this new software will be even more popular and enduring than the original Office suite of apps.
That means the gains on offer will be even bigger than during the wave of software profits Microsoft kicked off in the 1990s.
Today, I’ll show you what to look for, and how to profit, as this new stage of the AI boom unfolds.
As I’ve been showing you, the AI boom will unfold in three phases – hardware, software, everywhere.
This year has been mostly about the hardware phase.
Chipmaker Nvidia has become the poster child for this. It’s the leading maker of the specialized chips that allow ChatGPT and other AI systems to run efficiently and at scale.
These chips are so sought-after, the U.S. government has banned Nvidia from selling them to China.
The White House claims this is to stop the Chinese from using these chips for military purposes. But the export ban isn’t only about national security.
It’s also about protecting America’s economic power.
It took Microsoft 15 years to break the $1 billion-a-year revenue barrier.
OpenAI is on track to rake in over $1 billion from its AI chatbot, ChatGPT, within the first year of its launch.
It’s just one of many U.S. companies racing to develop similar software services that will earn them billions of dollars.
The ones who come out on top will be those with troves of customer data they can feed into the AIs they develop.
Microsoft is a case in point.
The company is weaving its AI chatbot – called Copilot – into its product line. It started with its Bing search engine, and now it’s moving on to its software staples.
This will cut down task times for folks using its software.
Consider Microsoft’s email app, Outlook. The new AI-powered Outlook will be a game-changer for companies.
It will write and respond to emails for you. And thanks to the data Microsoft has – your emails – it will capture your unique writing style, customer intel, and context.
When I was in college, I worked a summer job at an insurance company. I spent most of my days answering emails. If I’d had Copilot back then, I could have freed up a lot of time.
Now, picture a business with thousands of employees writing hundreds of thousands of emails every day. Using Copilot will slash the time they spend on their emails. This will free up time for more useful tasks.
Microsoft is charging firms $30 a month per employee for Copilot. That raises the annual subscription price of its Microsoft 365 bundle by 83%.
When the news broke, media outlets labeled the extra cost as “steep” or “pricey.”
But I’ve been through the ups and downs of owning a business. If I can up the productivity of my staff – even slightly – an extra $30 a month is money well spent.
I’m not the only one who feels that way. Microsoft says 40% of Fortune 100 companies are already using Copilot.
Microsoft is outpacing nearly all competitors in mass-deploying AI software.
That makes it a solid way to get exposure to the AI software trend.
But it’s not the ultimate AI stock. There’s another contender…
It’s growing at twice the clip of Microsoft. And last month, it rolled out its suite of AI software.
The day it went live, this company inked four major sales deals. One was from a U.S. government agency.
And its shares shot up 4% on a day when the rest of the market was getting crushed.
It’s one of nine AI software recommendations I’ve made at my Near Future Report advisory. And I couldn’t be more excited about their prospects. So, if you’re already a subscriber, make sure you’re all caught up here.
As we’ve seen with Microsoft’s ascent, the right software stock held for the long run can lead to windfall profits.
Regards,
Colin Tedards
Editor, The Bleeding Edge
P.S. I mentioned that there are three phases of the AI boom. In the everywhere phase, these systems will be even more commonplace than the internet is today. We’ll use AI in just about every aspect of our lives. AIs will drive our cars, fly our planes, diagnose and cure diseases, educate our kids, and work as our assistants.
Meanwhile, using AI to make their businesses more efficient will become the table stakes for companies. If a company doesn’t use AI, it will fall behind. It will be do or die. I know this sounds crazy. But that’s what happened with the internet. Companies such as Amazon that adopted the internet early on are among the world’s largest companies. Companies that didn’t, like Blockbuster, are no longer with us.
The most important thing to keep in mind is that this is a multi-phase boom. And luckily for us as investors, we’re at the start of the second phase. That means a ton of opportunities still to come.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
