Nivea(NASDAQ: NVDA ) And Microsoft(NASDAQ: MSFT ) They are pioneers in Artificial intelligence (AI) Both companies have played a central role in bringing this technology to the forefront.
While Microsoft-backed OpenAI kicked off the AI craze in November 2022 when it launched the wildly popular ChatGPT, the chatbot may not have seen the light of day without the Nvidia graphics processing units (GPUs) used to train the massive language model. (LLM) ChatGPT Empowerment. As other tech giants joined the AI race, demand for Nvidia’s chips went through the roof, boosting revenue and the bottom line.
Meanwhile, AI’s impact on Microsoft’s business is gradual. The company is spending billions building its AI data center infrastructure — benefiting Nvidia in the process — and believes its AI-focused investments will “support revenue generation for the next 15 years and beyond.” This explains why Nvidia stock has outperformed Microsoft by such a wide margin over the past two years.
But will Nvidia continue to outperform Microsoft in 2025? Let’s go, let’s go, let’s go.
As mentioned earlier, Microsoft is slowly taking advantage of AI. The company’s revenue in the year Adjusted earnings rose 20 percent year over year to $11.80. The company’s estimate of 14% revenue growth to $278.6 billion through 2025 isn’t quite as good, but revenue is expected to rise 10.5% to $13.04 a share.
Projections for fiscal 2026, which begins in July 2025, also do not indicate a major improvement. Consensus estimates are pointing to a 14% increase in Microsoft’s revenue and a 15% jump in revenue in the next fiscal year.
Chart of MSFT’s revenue estimates for the next fiscal year
On the other hand, Nvidia is expected to achieve a revenue growth of 112% to 129 billion dollars in the current fiscal year (end of January 2025) and 52% growth to 196 billion dollars in the next fiscal year. Nvidia’s bottom line is expected to jump an impressive 128% in the fiscal year just ended, followed by a 50% jump next year.
All of this suggests that NVIDIA may continue to grow faster than Microsoft in the coming year. What’s more, the 12-month average price targets for both companies suggest that Nvidia’s stock could rise by 33%, while Microsoft is expected to post a 20% gain. So, the odds seem in favor of Nvidia surpassing Microsoft by 2025, and that’s not surprising considering the chip maker. It continues to see high demand. Data center GPUs for AI.
However, it’s good for investors to note that a few risks may be weighing on Nvidia stock. From possible restrictions on the sale of AI chips to foreign countries to speculation that major Nvidia customers are trying to reduce their reliance on the chip, there are a number of reasons why Nvidia shares remain under pressure.
Moreover, the company’s growth – although still impressive – is gradually slowing down. These factors may cause NVIDIA stock to lose momentum in 2025. Microsoft, for its part, is slowly but steadily strengthening its game in key AI-driven areas, potentially setting it up for sustained growth.
The tech giant is gaining share in the cloud computing market thanks to AI. Microsoft Azure cloud and other services revenue increased 33 percent in the first quarter of 2025, with AI contributing 12 percentage points to that growth. Above all, AI is helping Microsoft build a strong revenue pipeline by increasing the number of large contracts signed for Azure cloud solutions.
This is evident from the 22% increase in Microsoft’s business residual performance obligations (RPO) to $259 billion in fiscal Q1 2025. The rapid growth in RPO compared to revenue bodes well for Microsoft, as that metric reflects the total value of a company’s unfulfilled contracts. Microsoft expects to realize 40% of RPO as revenue in the next 12 months, which would be an increase of 17% year over year.
As a result, the possibility of Microsoft growing faster than Wall Street’s expectations in the coming year cannot be ruled out. A similar story can be created on Nvidia, and the company can overcome the problem it is currently facing.
Although the administration’s potential ban on Nvidia’s chip exports could threaten impressive revenue growth — 56 percent of its revenue comes from customers outside the US — investors should note that the rules will take effect in 120 days. Management time to weigh in on the new rules.
Looking at the positive side of things, NVIDIA may be able to significantly increase production capacity of the latest Blackwell AI processors to meet the red-hot demand of its customers, and increase the cost of its US customers’ AI infrastructure. To help the company grow at an impressive pace through 2025, the possibility of Nvidia stock retaining its mojo despite the challenges it faces cannot be ruled out.
The uncertainty surrounding Nvidia, especially considering the latter, could tempt investors to take advantage of AI advances by putting their money into Microsoft stock. After all, Microsoft is trading 34 times cheaper than Nvidia’s earnings multiple of 52.
However, Nvidia’s earnings multiple of 31 is in line with Microsoft’s, and not surprising given the company’s potential growth. This now makes Nvidia an attractive AI stock, and investors can use the surrounding negative press as a buying opportunity considering that its massive market may be large enough to overcome any potential regulatory challenges.
But at the same time, even Microsoft looks like a top AI stock to buy for the long haul, given the huge opportunities in cloud computing and workplace collaboration that could fuel its growth.
So investors can buy one of these two AI stocks as their risk appetite, and there’s a good chance they won’t be wrong in 2025, and in the long term, Microsoft and Nvidia are both. Thanks to AI, it has settled on lucrative end markets.
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Harsh Chauhan It has no place in the said shares. The Motley Fool has positions and recommends Microsoft and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 calls on Microsoft for $405. The Motley Fool has Disclosure Policy.
