With investors growing ever concerned with AI spending, Microsoft (MSFT) is looking to justify it, as experts are noting that ventures into the sector have $100 billion potential for the company. Indeed, it has become one of the biggest spenders on the technology, but yet to see a significant return.

That is a common occurrence throughout Wall Street in 2024. Firms like Meta (META) and Amazon (AMZN) have not been shy about their desire to continue spending on AI development. The move looks to be a smart one, as they seek to compete with Nvidia (NVDA), a company on pace to be the first to break a $4 trillion market cap.

Microsoft's Nuclear Power Team to Fuel AI, Report
Source: CNBC

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Microsoft AI Spending Hinders Profits but Has Massive Potential, Expert Says

Amid Donald Trump’s successful return to the White House, Nvidia officially surpassed Apple (APPL) as the most valuable company in the world. Indeed, the chipmaker has benefited greatly from Wall Street’s fixation on AI. Moreover, it has inspired a plethora of companies to embrace entries into the tech field.

That has led to increased spending in an attempt to compete. Although Microsoft (MSFT) is expecting its AI spending to hinder profits, experts still believe it has $100 billion potential. Specifically, there is the belief that the big bet could pay off in a massive way for investors and the company.

Source: Forbes

Also Read: Microsoft CFO Says OpenAI Investment Will Impact MSFT Profit

In an interview with Yahoo Finance, Piper Sander research analyst Brent Bracelin discussed that very potential. Indeed, he noted that the AI business is expected to surpass $10 billion in less than three years. Moreover, he noted that the company “has legs” to reach the $100 billion threshold.

Although MSFT has invested a lot in AI, Bracelin notes that much of that is directed at building land. Specifically, the purchased land will “be filled with capacity,” driving revenue and profit increases for the company. The short-term may be concerning, but the long-term vision maintains the immense potential for immense growth from its current position.

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