Key Takeaways
- The technology sector is expected to experience superior growth in 2026, driven by demand for AI services.
- Advanced Micro Devices (AMD) and Microsoft (MSFT) are two AI stocks that can deliver wealth-building returns over the next decade.
- AMD’s diversified portfolio, including central processing units (CPUs) and adaptive computing chips, gives it a unique edge in the chip industry.
- Microsoft’s subscription-based business model and investments in AI infrastructure position it for significant growth across its business.
- Analysts expect AMD’s earnings to grow at an annualized rate of 45%, while Microsoft’s earnings are expected to grow at a rate of 13% per year.
Introduction to AI Stocks
The technology sector is where investors should look for superior growth stocks in 2026. According to the article, "Cloud service providers continue to see insatiable demand for AI services. This is creating a strong demand environment for tech companies throughout the supply chain in the AI infrastructure market." As a result, companies that provide AI services and infrastructure are well-positioned for growth. Two AI stocks that can deliver wealth-building returns over the next decade are Advanced Micro Devices (AMD) and Microsoft (MSFT).
Advanced Micro Devices (AMD)
Advanced Micro Devices is one of the top chip suppliers for the consumer PC market and data centers. Over the last two years, its revenue has grown at an annualized rate of over 20%, supporting rising share prices for investors. As AMD invests more in the AI infrastructure opportunity, management believes its growth will accelerate significantly. According to the article, "Wall Street analysts expect AMD to report $34 billion in revenue for 2025. AMD’s long-term outlook calls for its annual revenue to grow 35% on a compound annual basis over the next three to five years." AMD’s diversified portfolio, including central processing units (CPUs) and adaptive computing chips, gives it a unique edge in the chip industry. As the article notes, "AMD’s Ryzen processors continue to gain share against Intel in the consumer market, with client segment revenue hitting a record $2.8 billion in Q3, representing a 46% year-over-year increase."
Microsoft (MSFT)
Microsoft has a lucrative ecosystem of productivity tools, cloud services, and other professional services that serve a large base of users. Its subscription-based business model generates substantial revenue, which fuels investment in innovation. The article states, "Microsoft spent $69 billion in capital expenditures over the last year, all of which was internally funded out of its $147 billion in trailing cash from operations." Microsoft’s large fleet of data centers powers the cloud services behind all its products, and is helping drive significant growth across its business. As the article notes, "Microsoft 365, including Office software, has over 400 million paid subscribers, while its Copilot AI assistant has more than 100 million monthly active users." AI remains a key driver for the Microsoft Azure cloud business, with revenue growing 40% year over year last quarter.
Growth Prospects
Both AMD and Microsoft have strong growth prospects. AMD’s earnings are expected to grow at an annualized rate of 45%, while Microsoft’s earnings are expected to grow at a rate of 13% per year. According to the article, "Analysts expect the company’s earnings to grow at an annualized rate of 45% in the coming years." Microsoft’s huge installed base of users and technology infrastructure will make it a formidable player in an AI-driven economy. The article notes, "Microsoft is spending aggressively on AI infrastructure, while still reporting healthy profitability. Operating profit grew 24% year over year last quarter, higher than its 18% top-line growth rate."
Conclusion
In conclusion, the technology sector is expected to experience superior growth in 2026, driven by demand for AI services. Advanced Micro Devices and Microsoft are two AI stocks that can deliver wealth-building returns over the next decade. With their diversified portfolios, strong growth prospects, and investments in AI infrastructure, these companies are well-positioned for success in the AI-driven economy. As the article notes, "The 10 stocks that made the cut could produce monster returns in the coming years." Investors looking to invest in the technology sector should consider AMD and MSFT as potential additions to their portfolios.
https://www.nasdaq.com/articles/2-artificial-intelligence-ai-stocks-buy-january-and-hold-10-years