Microsoft (NASDAQ:MSFT) is about to have another big AI-driven year as the enterprise behemoth aims to spend a colossal $80 billion on AI-related efforts for fiscal year 2025, a big chunk of which will go toward building out AI data centers. Indeed, AI is moving through an infrastructure boom of sorts. As new AI applications and agentic AI come into the new year, the hyperscalers will really need to keep their foot on the gas to avoid resource shortages should new, more energy-intensive AI applications hit the consumer and enterprise markets.

With the “AI bubble” talk floating around, look for the Magnificent Seven tech players to pay more emphasis on deliberate investments and driving operating efficiencies rather than “flooring it” and worrying about profitability prospects and margins later on.

Indeed, whether Microsoft’s latest AI spending spree is well-timed at this point in the AI race remains the big question. Either way, overinvestment in capacity seems like the lesser risk, in my opinion, especially given the ground-breaking new AI innovations coming our way in 2025 and a pro-AI-spending Donald Trump who wants to empower tech firms to keep leading the charge on AI.

A hot start to the year for all things AI

We’re not even a month into the new year, and we’ve already seen a handful of promising developments on the AI front. Whether we’re talking about the $500 billion AI project named Stargate or OpenAI’s recent introduction of its AI agent named Operator, it’s setting up to be a fast-paced year for big tech and AI’s next phase. Over the coming year, I expect numerous other firms to follow suit with AI agents of their own.

As Microsoft aims to show it’s doing more than “repackaging” ChatGPT across its software suite, a recent criticism of Salesforce (NYSE:CRM) CEO Marc Benioff, it’s sure to be an interesting year for the Magnificent Seven as they aim to support their elevated valuation metrics with more impressive growth drivers.

Indeed, it’s an exciting time as we shift from large language models (LLMs) and AI copilots to AI agents, robotics, and even the rise of digital labor. While the timing will always be difficult, I think the next phase of the AI boom could fly mostly under the radar of most investors.

Microsoft’s right to keep spending

Unlike consumer-facing AI products like ChatGPT, the full extent of the capabilities of an enterprise-focused AI agent may be more difficult to gauge. While consumer-grade AI agents may impress a great deal, one should reset their expectations as the “awe” factor may be miles shy of the original launch of ChatGPT just north of two years ago.

In any case, I wouldn’t bet against Microsoft as it rings in the AI agent age while continuing to spend heavily on infrastructure while enhancing the capabilities of Copilot. The big question, though, is whether the value added from such Copilots and agents will surge suddenly or experience modest year-over-year gains. The pace is difficult to project. Either way, I think Microsoft is positioned to win.

Microsoft stock: An AI top dog at a fair price

Undoubtedly, quite a bit of AI has already been baked into Microsoft’s share price at this juncture. Still, after spending a year going sideways (at least relative to the S&P 500), I do think new AI developments can help the enterprise giant march higher.

With Bank of America (NYSE:BAC) recently delivering positive remarks about Microsoft going into its January 29, 2025 earnings, citing Azure and Office as strong points, I view MSFT as one of the better value plays in the Magnificent Seven to play AI in 2025.

At 33.9 times forward price-to-earnings (P/E), you’re getting a ton of innovation for a fairly reasonable price. Additionally, don’t discount Microsoft’s ability to take market share in the consumer-facing AI scene, as it’s rumored to launch a smaller AI-capable Surface Pro in the near future.

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