Visa and Microsoft Stocks Poised for Long-Term Growth

Visa processed $15 trillion in payments volume in 2023, solidifying its position in digital payments. Microsoft's AI-powered Copilot is experiencing rapid adoption, positioning the company for growth in the booming AI market.

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Nitish Verma
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Visa and Microsoft Stocks Poised for Long-Term Growth

Visa and Microsoft Stocks Poised for Long-Term Growth

Visa and Microsoft are well-positioned for long-term growth due to their dominant positions in digital payments and artificial intelligence (AI) technology, respectively. Visa, the leading U.S. payment card company, processed a staggering $15 trillion in payments volume in 2023, solidifying its position as a powerhouse in the digital payments landscape.

Why this matters: The growth of digital payments and AI technology has significant implications for the global economy, as it can increase efficiency, reduce costs, and improve productivity. As these technologies continue to advance, they are likely to have a profound impact on various industries, from healthcare to finance, and shape the future of work and commerce.

Despite its size and might, Visa's stock has underperformed the S&P 500 index in recent years. However, the company's business model, which involves processing transactions on credit and debit cards and earning a small percentage of each purchase, remains strong. In its fiscal second quarter, Visa reported an 8% year-over-year increase in total payment volume, a 16% rise in cross-border transactions, a 10% gain in net revenue to $8.8 billion, and a 17% improvement in non-GAAP net income to $5.1 billion.

On the other hand, Microsoft is making waves in the AI sector with its AI-powered Copilot experiencing rapid adoption among corporations. The global AI market, important, trends, consider is expected to reach $309.6 billion by 2026, growing at a compound annual growth rate (CAGR) of 40.1% from 2021 to 2026. Microsoft's strength in AI technology positions the company for long-term growth in this booming industry.

AI is revolutionizing operations, increasing productivity, and spurring creativity in various sectors, including healthcare, banking, retail, manufacturing, and automobiles. AI-powered technologies are improving patient care, streamlining clinical workflows, and increasing operational efficiency in healthcare businesses. The automobile industry is also adopting AI in the development of autonomous vehicles, enabling advanced driver-assistance systems, autonomous navigation, and predictive maintenance.

Visa's forward P/E ratio has fallen under 30, currently standing at 28.1, with analysts forecasting 16% growth in per-share earnings this year and 12% revenue growth. These projections are expected to dip slightly in fiscal 2025 but remain in double-digit territory. As the global economy continues to shift towards non-cash means of payment, Visa is poised to benefit from its dominant position. With its strong growth numbers and relatively low valuation, Visa is considered a good stock to own, especially with many investors ignoring the company.

In the cybersecurity sector, which is a key area of focus for Microsoft, cyber startups raised nearly $2.7 billion in 154 deals in Q1 2024, a 69% increase from the previous quarter. Public cybersecurity companies have reached unprecedented market capitalizations, with notable examples including ZScaler at $26 billion, Fortinet at $49 billion, and Crowdstrike at $71 billion. Palo Alto Networks has exceeded a market capitalization of $100 billion, marking a significant milestone in the industry.

Visa and Microsoft's dominant positions in their respective markets make them attractive investment opportunities for those looking for long-term growth. With Visa's $15 trillion in payments volume and Microsoft's rapid adoption of its AI-powered Copilot, both companies are well-positioned to capitalize on the latest, trends in digital payments and artificial intelligence.

Key Takeaways

  • Visa processed $15 trillion in payments volume in 2023, solidifying its digital payments dominance.
  • Microsoft's AI-powered Copilot is experiencing rapid adoption, positioning the company for long-term growth.
  • The global AI market is expected to reach $309.6 billion by 2026, growing at a 40.1% CAGR.
  • Visa's stock has underperformed the S&P 500, but its business model remains strong with 8% YoY payment volume growth.
  • Both Visa and Microsoft are attractive investment opportunities for long-term growth due to their dominant market positions.