Key Takeaways
- Cloud computing, especially AI‑driven workloads, is poised to remain a dominant growth engine for the next decade.
- Alphabet’s Google Cloud is the fastest‑growing major cloud platform, posting 63% YoY revenue growth and expanding operating margins from 18% to 33%.
- Gemini, Alphabet’s native generative AI model, and its custom Tensor Processing Unit (TPU) give Google Cloud a cost‑performance edge for AI workloads.
- Microsoft Azure delivers strong 40% YoY growth, benefits from an agnostic AI stance, and leverages a 27% stake in OpenAI plus widespread Copilot integration.
- Both stocks trade below recent highs, offering attractive entry points for long‑term investors seeking exposure to durable cloud‑AI trends.
Introduction: The Challenge of Long‑Term Stock Picking
Finding stocks to buy and hold over the next decade is no easy task. If you rewind to mid‑2016, could you have predicted all of the various notable events that occurred over the next few years: COVID‑19, the rise of generative AI, presidential election results, or wars? I doubt it. Yet, as the author notes, “a few somewhat predictable items have panned out. One of those is cloud computing, which was just starting to pick up momentum in 2016 and turned out to be a great business over the next decade.” This observation sets the stage for why cloud‑centric companies merit attention today.
Alphabet’s Google Cloud Momentum
Alphabet’s cloud computing wing is known as Google Cloud. Google Cloud was the last of the major three cloud platforms to start up, but it has quickly risen to become a notable force among the three, the other being Amazon’s (AMZN +0.57%) Amazon Web Services (AWS). The platform’s rapid ascent is underscored by its financial performance: “In the first quarter, its revenue rose by a jaw‑dropping 63% year over year, adding nearly $8 billion in new business over the past 12 months. It also did a tremendous job expanding its operating margin from 18% to 33%.” Such growth outpaces both AWS and Azure, signalling a strong competitive trajectory.
AI Advantage: Gemini and TPU
All of this is occurring because Google Cloud has become a top place to run AI workloads. Alphabet has a strong generative AI offering, Gemini, native to Google Cloud. Gemini is a strong competitor in the AI arena and offers some of the highest‑performing yet lowest‑cost models in the market. The vast majority of AI applications are likely suited to this lower‑cost offering, making Google Cloud a top place to build AI applications. Furthermore, Google Cloud has a secret weapon: The Tensor Processing Unit (TPU). The TPU is a custom‑designed AI chip that can offer superior cost‑performance compared to GPU‑based training and is another reason Google Cloud is so rapidly growing. In fact, the TPU is so effective that Alphabet is going to start selling TPUs to external clients as another revenue stream.
Financial Highlights of Alphabet
Today’s Change(-0.85%) $-2.96Current Price$346.72Key Data PointsMarket Cap$4.2TDay’s Range$340.36 – $349.2752wk Range$167.55 – $408.61Volume1.1MAvg Vol30.3MGross Margin60.43%Dividend Yield0.25%
These metrics reflect a company with a massive market cap, healthy gross margins, and a modest dividend—features that appeal to both growth‑oriented and income‑focused investors. The combination of surging cloud revenue, expanding profitability, and a differentiated AI stack positions Alphabet for sustained outperformance.
Microsoft’s Azure Strength and Agnostic AI Approach
Microsoft doesn’t provide investors with as much information regarding Azure as Alphabet does with Google Cloud. Instead, it provides investors only with its growth rate, which was 40% year over year in its latest quarter. That’s still an impressive growth rate, and what’s driving that is Microsoft’s neutral state. Unlike Alphabet, which would prefer its users to use its Gemini family, Microsoft is staying agnostic. Countless large language models can be accessed on Azure, making it a great place to go if you’re not sure which AI model you want driving your application. This flexibility attracts enterprises seeking to avoid vendor lock‑in while still tapping cutting‑edge AI.
Copilot and OpenAI Stake
But Microsoft also owns 27% of OpenAI, the makers of ChatGPT, so it also has a vested interest in having its clients choose ChatGPT. Microsoft has also integrated ChatGPT across its various business productivity software via Copilot, which is part of an AI business unit with annual revenue of $37 billion, growing at a 123% clip. The rapid expansion of Copilot demonstrates how Microsoft monetizes AI not just as a cloud service but as an embedded layer across its ubiquitous Office ecosystem, creating a sticky, recurring‑revenue stream.
Valuation and Investment Thesis
Perhaps the most compelling part about Microsoft’s stock is its stock price: It’s down 30% from its highs. Considering the strength of Microsoft’s core business and the longevity of the new cloud workloads coming online, I think this is a bargain, and investors should scoop up Microsoft stock alongside Alphabet’s to form a great investment group that should crush the market over the next decade. The dual‑pronged approach—owning the fastest‑growing pure‑play cloud AI platform (Google Cloud) and a diversified, enterprise‑focused cloud leader with deep AI integration (Azure)—offers both upside potential and downside protection.
Conclusion: A Decade‑Long Cloud‑AI Play
In summary, the article argues that cloud computing, fortified by exploding AI demand, represents a predictable, high‑conviction theme for the next ten years. Alphabet’s Google Cloud leads in growth margin expansion and offers proprietary AI assets—Gemini and TPUs—that lower the cost of running advanced models. Microsoft Azure, while growing at a slightly slower pace, provides unmatched flexibility through an agnostic AI platform, a sizable OpenAI stake, and the monetization of AI across its productivity suite via Copilot. Both stocks trade below recent peaks, presenting attractive entry points. For investors seeking durable exposure to the secular shift toward cloud‑based AI, a combined position in Alphabet and Microsoft could deliver robust, market‑beating returns over the coming decade.
https://www.fool.com/investing/2026/06/24/got-1000-2-artificial-intelligence-ai-stocks-to-bu/