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Over the past 48 hours, three of the world’s largest tech companies – Alphabet (GOOGL), Microsoft (MSFT), and Meta (META) – reported third-quarter earnings. And we think the takeaway from those results is consistent and clear: the investment opportunity AI offers is immense. Now, I know that since late 2022, we’ve been hearing about AI’s potential almost non-stop. News reporters, technologists, and investors alike have been hyperfocused on this emerging industry. After all, artificial intelligence encompasses a massive technological revolution. And in our view, it represents one of the biggest investment opportunities of our lifetimes. But it’s one thing to hear that from a bunch of “outsiders” – and another to see it from within the world’s tech titans themselves. Well, this week, we got an update straight from the horse’s mouth, if you will. Alphabet, Microsoft, and Meta all breezed revenue and profit estimates in their latest quarterly reports. Alphabet reported 15% revenue growth. Microsoft reported 16% revenue growth, and Meta achieved 19% revenue growth. In other words, all grew profits by more than 10%. And each drove those strong results in large part because of artificial intelligence. Driving Robust Growth With AI In short, these Big Tech firms have figured out how to use AI to enhance their businesses. All three are leveraging AI to improve their existing products, launch new offerings, and boost profit margins. For example, when it comes to existing products, Alphabet has improved Google Search with AI Overviews. Meta has refined Facebook and Instagram feeds using AI-powered recommendations, and Microsoft is using its 365 Copilot to better customers’ Office 365 experience. And these efforts are paying off in spades. Alphabet’s AI Overviews are driving increased Google Search usage. AI-powered content algorithms are leading to increased time spent on the Facebook and Instagram platforms. And about 70% of Fortune 500 firms have signed up for Office 365 Copilot. Alphabet, Microsoft, and Meta are all using AI to improve their existing products. And as a result, usage of their existing products is rising strongly. Meanwhile, all three are also using AI to launch new products. Alphabet has created a new AI model, Gemini. According to management, Gemini growth is surging right now. Meta has launched its own Meta AI assistant within its apps – and it already has 500 million monthly active users. And Microsoft has launched an AI-powered data analytics platform, Fabric, which is already being used by more than 70% of the Fortune 500. Amidst all this growth, all three Big Tech firms also reported strong profit margin performance – with both Meta and Alphabet reporting major expansion therein. Indeed, Meta recorded net profit margins of 38.65%, while Alphabet achieved profit margins of 29.79%. And this is all the product of Meta, Alphabet, and Microsoft figuring out how to use AI internally to boost efficiency. The Final Word So, three of the world’s largest companies are all using AI to improve their existing products, launch new offerings, and boost profit margins. And that is leading to supercharged revenue growth at all three firms… not to mention, supercharged profit growth, too. Clearly, there sure is something to all this ‘AI mania.’ Sure, a lot of pundits out there believe AI is just a bunch of hype and a bubble waiting to burst. But what Meta, Microsoft, and Alphabet reported this week wasn’t the product of hype. It was real revenue, profit, and usage growth. It was real profit margin expansion. And as such, it was proof that the AI Boom is the real deal – and confirmation that it may offer the investment opportunity of a lifetime. AI stocks will likely remain the big winners on Wall Street, so long as stocks keep pushing higher – and we expect they will for the foreseeable future. That means now is the time to be invested in the AI stocks poised to soar alongside a continuing market rally. But with so much investor hype and market noise going on, uncovering tomorrow’s winners is no small task. And we remain as steadfast as ever in our search for the best this AI Boom has to offer. Sincerely, | 
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