Microsoft trades cheapest of big tech on AI spending gap

The four stocks that usually anchor any big tech discussion — Apple, Alphabet, Microsoft, and Amazon — carry different valuations because of how each is approaching AI. Apple has largely stayed out of AI data center construction, a stance that has made its stock a haven for investors wary of an AI bubble, though the piece notes this could prove either a genius strategy or a costly mistake in retrospect.

Alphabet and Amazon have gone all-in, spending every penny they can on AI data centers for their cloud computing units, and their stocks have become attractive to AI bulls as a result. Microsoft sits in the middle: it is spending heavily on AI, but not to the same degree, and its flagship AI product, Copilot, consistently lags the competition in AI proficiency scores. The market wants an all-in or all-out approach, and Microsoft's middle-ground position has made it a less popular investment — which is why its valuation is the cheapest of the cohort.