Microsoft, Amazon and Alphabet are all winning in AI, says D.A. Davidson's Gil Luria
Speakers
Gil Luria
— Technology Strategist at D.A. Davidson
Summary
D.A. Davidson's Gil Luria analyzes which mega-cap tech stocks are best positioned in the AI race. He sees Microsoft as the standout due to capital efficiency and cheapest valuation, while all three hyperscalers are AI winners. Meta and Oracle face respective transparency and execution challenges.
- Microsoft reported positive cash flow and will raise capex without a big jump, making it less capital-intensive than Google or Amazon.
- Microsoft’s advantage is selling infrastructure software on top of AI compute, providing higher-margin upselling opportunities.
- All three hyperscalers—Microsoft, Amazon, and Alphabet—are AI winners, but Microsoft is the cheapest on valuation, Amazon the most expensive.
- Meta’s AI data center monetization remains unclear to investors, creating an overhang despite a strong 28% ad revenue growth.
- Oracle is struggling with data center build-out, capital needs, and an undelivered equity offering, with CDS spreads reflecting strain.
- Luria emphasizes that execution and messaging will determine whether Meta and Oracle can deliver on AI capacity.
Ideas
Microsoft capital-efficient leader, cheapest valuation.
Microsoft is structurally better positioned in AI because it reported positive cash flow and plans to increase capex without significant jump, unlike Google and Amazon which are cash-flow negative and will stay negative. Microsoft also benefits from selling higher-margin infrastructure software (Fabric, databases, orchestration) on top of AI compute, making it less capital-intensive. Among the three hyperscalers, Microsoft is now the least expensive on valuation, giving it a dual advantage in ability to deliver and efficiency.
All three hyperscalers are AI winners.
All three hyperscalers—Microsoft, Amazon, and Alphabet—are winning in AI. The only difference right now is valuation: Amazon is the most expensive, Google the second, and Microsoft the least expensive, but all three are winning.
