2 AI Stocks Worth Investing In and 1 to Steer Clear Of
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 17 2025
0mins
Should l Buy MSFT?
Source: Fool
Oracle's Market Position: Oracle is facing increased scrutiny from investors, with its stock price declining and concerns about its financial strategy, particularly regarding a $300 billion deal with OpenAI to build data centers.
Bond Market Concerns: The bond market is demanding higher yields for Oracle compared to competitors like Alphabet and Microsoft, indicating a perceived higher risk associated with Oracle's debt.
Credit Default Swaps: Oracle's credit default swap spreads have significantly increased, suggesting growing concerns about the risk of default on its debt, while Alphabet and Microsoft have maintained stable spreads.
Investment Recommendations: Given the financial challenges and rising borrowing costs, investing in Microsoft and Alphabet is viewed as a more favorable option for those interested in the AI sector compared to Oracle.
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Analyst Views on MSFT
Wall Street analysts forecast MSFT stock price to rise
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 409.410
Low
500.00
Averages
631.36
High
678.00
Current: 409.410
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company that develops and supports software, services, devices, and solutions. Its Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. It comprises Microsoft 365 Commercial products and cloud services; Microsoft 365 Consumer products and cloud services; LinkedIn, and Dynamics products and cloud services. The Intelligent Cloud segment consists of its public, private, and hybrid server products and cloud services. It comprises server products and cloud services, including Azure, and enterprise and partner services, including Enterprise Support Services. Its More Personal Computing segment primarily comprises Windows and Devices, including Windows OEM licensing; Gaming, including Xbox hardware and Xbox content; Search and news advertising, comprising Bing and Copilot, Microsoft News, and Microsoft Edge.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Price Increase: Microsoft is raising the monthly fee for its enterprise Microsoft 365 E7 to $99, a 65% increase from the $60 E5 subscription, aiming to attract more enterprise users to its Copilot AI add-on, thereby boosting overall revenue.
- New Product Bundle: The E7 suite includes $30 for Copilot, $12 for Entra identity tools, and $15 for Agent 365, providing a comprehensive AI management solution that enhances companies' competitiveness in digital transformation.
- Increased Market Adoption: Microsoft’s commercial CEO Judson Althoff stated that the launch of E7 is expected to drive broader adoption of Copilot, which has yet to become common among commercial productivity users, indicating a growing demand for AI tools in the market.
- Competitive Pressure: This pricing and product update comes amid investor concerns about AI models from Anthropic potentially threatening established software companies, with Microsoft’s strategic adjustments aimed at solidifying its market position and addressing competitive challenges.
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- Market Impact: Promptfoo's open-source tools have been downloaded by over 125,000 developers and are currently utilized by more than 25% of Fortune 500 companies, highlighting the widespread acceptance and significance of its products in the market.
- Technology Integration: OpenAI plans to integrate several of Promptfoo's tools into its Frontier platform, enhancing the security and reliability of AI applications, thereby improving safety testing and oversight capabilities during AI development workflows.
- Founders' Background: Promptfoo's founders, Ian Webster and Michael D'Angelo, bring extensive industry experience, with Webster previously leading large language model engineering teams at Discord and D'Angelo serving as the former VP of engineering at Smile Identity, showcasing their technical expertise and industry insights.
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- Performance Beat: Oracle reported adjusted earnings per share of $1.79, exceeding the expected $1.70, with revenue reaching $17.19 billion, significantly above the anticipated $16.91 billion, indicating strong performance in the cloud computing sector.
- Cloud Revenue Surge: The company achieved $8.9 billion in cloud revenue, a 44% year-over-year increase, surpassing analyst expectations of $8.85 billion, while cloud infrastructure revenue soared by 84%, demonstrating successful expansion of cloud service capabilities.
- Optimistic Financial Outlook: Management raised the fiscal 2027 revenue forecast to $90 billion, well above the $86.6 billion expected by analysts, reflecting strong confidence in future cloud market demand despite the company's high debt load.
- Infrastructure Expansion Plans: Oracle plans to raise $45 billion to $50 billion this fiscal year to expand its cloud infrastructure, and is actively constructing a data center in Abilene, Texas, in partnership with Crusoe, showcasing its strategic positioning in the AI sector.
See More
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- Nvidia's Growth Potential: Despite Nvidia's market cap reaching $4.4 trillion, management anticipates a 77% revenue increase in the current fiscal Q1, indicating strong growth potential amid sustained AI demand, with a current stock price at just 21.9 times forward earnings, significantly below the broader market.
- Microsoft's Steady Performance: Microsoft achieved a 17% year-over-year growth in its latest quarter, with Azure's revenue soaring 39%, and despite a trailing P/E ratio below 26, the stock presents an attractive buying opportunity for investors looking to increase their holdings at this time.
- Challenges for The Trade Desk: The Trade Desk faces slowing growth and market share issues, yet reported a 14% year-over-year revenue increase in Q4, with management guiding for about 10% growth next quarter, reflecting resilience in its advertising technology platform, while trading at just 15 times forward earnings, indicating low market expectations for future growth.
- Long-term Investment Opportunities: Given the rapid growth in the advertising market, The Trade Desk's undervaluation presents a compelling opportunity for long-term investors, and alongside the strong performances of Microsoft and Nvidia, these stocks are expected to rebound, making them suitable for accumulation during market downturns.
See More
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- Community Protests: Despite attempts by the NAACP and other civil rights organizations to delay the meeting to avoid conflicts with primary elections, the MDEQ proceeded with the vote on election day, leading to community dissatisfaction over the decision-making process and perceived neglect of local voices and environmental impacts.
- Legal Challenges Ahead: The NAACP and Southern Environmental Law Center plan to sue xAI for operating natural gas turbines without federal permits, alleging that the company understated emissions in its application, which could pose health risks to the community.
- Rising Energy Demands: As xAI plans to construct a new data center in Southaven, the anticipated increase in energy demand raises concerns about local environmental quality and residents' quality of life, particularly regarding noise and air pollution issues.
See More
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- Rapid User Growth: Since its launch in December, GenAI.mil has attracted over one million users in just over a month, with five military branches designating it as their primary enterprise AI productivity platform, indicating strong market demand.
- Project Planning Optimization: The platform's AI agents can break large goals into step-by-step checklists with timelines, thereby improving project planning efficiency and helping teams manage tasks more effectively.
- Legal Controversy with Anthropic: As the Pentagon expands its AI tools, Anthropic has filed a lawsuit against the U.S. Department of Defense after being designated a supply chain risk, reflecting the legal and ethical challenges in military AI applications.
See More
Microsoft Raises Office Suite Prices Amid AI Integration
- Price Increase: Microsoft is raising the monthly fee for its enterprise Microsoft 365 E7 to $99, a 65% increase from the $60 E5 subscription, aiming to attract more enterprise users to its Copilot AI add-on, thereby boosting overall revenue.
- New Product Bundle: The E7 suite includes $30 for Copilot, $12 for Entra identity tools, and $15 for Agent 365, providing a comprehensive AI management solution that enhances companies' competitiveness in digital transformation.
- Increased Market Adoption: Microsoft’s commercial CEO Judson Althoff stated that the launch of E7 is expected to drive broader adoption of Copilot, which has yet to become common among commercial productivity users, indicating a growing demand for AI tools in the market.
- Competitive Pressure: This pricing and product update comes amid investor concerns about AI models from Anthropic potentially threatening established software companies, with Microsoft’s strategic adjustments aimed at solidifying its market position and addressing competitive challenges.
See More
OpenAI Plans to Acquire Security Startup Promptfoo
- Acquisition Announcement: OpenAI has revealed plans to acquire Promptfoo, a startup focused on helping enterprises identify and rectify vulnerabilities in AI systems, indicating a strategic move into the AI security sector.
- Market Impact: Promptfoo's open-source tools have been downloaded by over 125,000 developers and are currently utilized by more than 25% of Fortune 500 companies, highlighting the widespread acceptance and significance of its products in the market.
- Technology Integration: OpenAI plans to integrate several of Promptfoo's tools into its Frontier platform, enhancing the security and reliability of AI applications, thereby improving safety testing and oversight capabilities during AI development workflows.
- Founders' Background: Promptfoo's founders, Ian Webster and Michael D'Angelo, bring extensive industry experience, with Webster previously leading large language model engineering teams at Discord and D'Angelo serving as the former VP of engineering at Smile Identity, showcasing their technical expertise and industry insights.
See More
Oracle Surpasses Estimates and Raises Fiscal 2027 Guidance
- Performance Beat: Oracle reported adjusted earnings per share of $1.79, exceeding the expected $1.70, with revenue reaching $17.19 billion, significantly above the anticipated $16.91 billion, indicating strong performance in the cloud computing sector.
- Cloud Revenue Surge: The company achieved $8.9 billion in cloud revenue, a 44% year-over-year increase, surpassing analyst expectations of $8.85 billion, while cloud infrastructure revenue soared by 84%, demonstrating successful expansion of cloud service capabilities.
- Optimistic Financial Outlook: Management raised the fiscal 2027 revenue forecast to $90 billion, well above the $86.6 billion expected by analysts, reflecting strong confidence in future cloud market demand despite the company's high debt load.
- Infrastructure Expansion Plans: Oracle plans to raise $45 billion to $50 billion this fiscal year to expand its cloud infrastructure, and is actively constructing a data center in Abilene, Texas, in partnership with Crusoe, showcasing its strategic positioning in the AI sector.
See More
Investment Opportunities Amid Market Decline
- Nvidia's Growth Potential: Despite Nvidia's market cap reaching $4.4 trillion, management anticipates a 77% revenue increase in the current fiscal Q1, indicating strong growth potential amid sustained AI demand, with a current stock price at just 21.9 times forward earnings, significantly below the broader market.
- Microsoft's Steady Performance: Microsoft achieved a 17% year-over-year growth in its latest quarter, with Azure's revenue soaring 39%, and despite a trailing P/E ratio below 26, the stock presents an attractive buying opportunity for investors looking to increase their holdings at this time.
- Challenges for The Trade Desk: The Trade Desk faces slowing growth and market share issues, yet reported a 14% year-over-year revenue increase in Q4, with management guiding for about 10% growth next quarter, reflecting resilience in its advertising technology platform, while trading at just 15 times forward earnings, indicating low market expectations for future growth.
- Long-term Investment Opportunities: Given the rapid growth in the advertising market, The Trade Desk's undervaluation presents a compelling opportunity for long-term investors, and alongside the strong performances of Microsoft and Nvidia, these stocks are expected to rebound, making them suitable for accumulation during market downturns.
See More
xAI Secures Approval for Power Plant in Mississippi
- Power Plant Approval: xAI's subsidiary MZX Tech LLC received authorization to build a power plant with 41 natural gas turbines in Southaven, Mississippi, aimed at supplying power to nearby data centers, a decision that has sparked significant local opposition due to environmental pollution concerns.
- Community Protests: Despite attempts by the NAACP and other civil rights organizations to delay the meeting to avoid conflicts with primary elections, the MDEQ proceeded with the vote on election day, leading to community dissatisfaction over the decision-making process and perceived neglect of local voices and environmental impacts.
- Legal Challenges Ahead: The NAACP and Southern Environmental Law Center plan to sue xAI for operating natural gas turbines without federal permits, alleging that the company understated emissions in its application, which could pose health risks to the community.
- Rising Energy Demands: As xAI plans to construct a new data center in Southaven, the anticipated increase in energy demand raises concerns about local environmental quality and residents' quality of life, particularly regarding noise and air pollution issues.
See More
Pentagon Launches No-Code AI Tool for Personnel
- AI Agent Design Platform: The Pentagon's Agent Designer is a no-code platform that allows civilian and military personnel to build AI agents using plain language instructions, thereby streamlining repetitive administrative tasks and enhancing work efficiency.
- Rapid User Growth: Since its launch in December, GenAI.mil has attracted over one million users in just over a month, with five military branches designating it as their primary enterprise AI productivity platform, indicating strong market demand.
- Project Planning Optimization: The platform's AI agents can break large goals into step-by-step checklists with timelines, thereby improving project planning efficiency and helping teams manage tasks more effectively.
- Legal Controversy with Anthropic: As the Pentagon expands its AI tools, Anthropic has filed a lawsuit against the U.S. Department of Defense after being designated a supply chain risk, reflecting the legal and ethical challenges in military AI applications.
See More
