If I Had $5,000 to Invest Today, Here's the Trillion-Dollar Stock I'd Buy Instead of SpaceX
If I Had $5,000 to Invest Today, Here's the Trillion-Dollar Stock I'd Buy Instead of SpaceX
Anthony Di Pizio, The Motley FoolWed, June 24, 2026 at 8:57 AM UTC
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Key Points -
Space Exploration Technologies (SpaceX) went public on Friday, June 12, and its initial momentum appears to have already stalled.
SpaceX stock remains incredibly expensive, so I think investors can find better value elsewhere.
Microsoft operates a series of rapidly growing businesses in the artificial intelligence industry, and yet its stock looks incredibly cheap right now.
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Elon Musk's space transportation and satellite internet connectivity company, Space Exploration Technologies (NASDAQ: SPCX), went public on Friday, June 12. It was well received by investors, and its stock climbed to a peak of $218 per share within a few days.
But with a market capitalization of $2.8 trillion and just $19.3 billion in trailing-12-month revenue, it was trading at a sky-high price-to-sales ratio of 145, making it a whopping 20 times as expensive as the Nasdaq-100 technology index.
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That valuation was simply unsustainable, and as of the market close on Thursday, June 18, SpaceX stock had already fallen to $185. But it's still very expensive, so if I had $5,000 to invest in one stock for my diversified portfolio, I would probably look elsewhere. In fact, here's why Microsoft (NASDAQ: MSFT) might be the better long-term buy.
An investor sitting at their desk studying charts on a piece of paper, while surrounded by computer screens.
Image source: Getty Images.
Positioned to lead the artificial intelligence software race
Microsoft has a broad portfolio of software products, which includes the Windows operating system, the Edge internet browser, the Bing search engine, and the 365 productivity suite (Word, Excel, Outlook, and more). The company developed an artificial intelligence (AI) assistant called Copilot, which it has embedded into each of those software products.
Microsoft has a huge advantage over most pure-play AI software companies such as OpenAI and Anthropic, because it has the distribution side sorted. Windows alone powers over 1.6 billion monthly active devices worldwide, which gives Copilot an unprecedented amount of reach without the need for marketing or any other user acquisition costs.
Copilot is available for free through Windows, Edge, and Bing, but it's a paid add-on for the 365 application suite. This is a huge financial opportunity for Microsoft, especially on the enterprise side, because organizations around the world pay for over 400 million 365 licenses for their employees. As of the company's fiscal 2026 third quarter (ended March 31), enterprises had added Copilot to 20 million licenses, up by a whopping 250% year over year.
Microsoft's Azure cloud platform is growing rapidly
Microsoft Azure is a cloud computing platform that offers hundreds of solutions to help enterprises thrive in the digital age, from simple data storage to complex software development tools. However, it's also a top destination for enterprises that need access to the computing capacity, ready-made large language models, and other services required to develop AI software.
Microsoft operates AI data centers worldwide, equipped with thousands of the latest chips and components from leading suppliers, including Nvidia and Advanced Micro Devices. Demand for computing capacity is off the charts -- Microsoft ended the third quarter with an eye-popping $627 billion order backlog from customers who were waiting for more data centers to come online, and that figure doubled from the year-ago period.
Azure's total revenue grew by 40% during the third quarter, which marked an acceleration from its second-quarter growth of 39%. Microsoft plans to double its global data center footprint over the next two years to help fulfill its enormous order backlog, so it's possible Azure's revenue growth will accelerate even further from here.
Microsoft stock trades at a very attractive valuation
Earlier this year, fears emerged on Wall Street that AI would disrupt the software-as-a-service (SaaS) industry, so investors started reducing their exposure to the space. Some analysts think AI could reduce the global workforce, thus affecting companies that sell software on a per-user basis. Other analysts believe AI will allow businesses to build their own versions of legacy software products such as Word or Excel, reducing the need for vendors like Microsoft entirely.
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As a result, Microsoft stock is currently down 30% from its all-time high. However, the blistering growth in Copilot adoption, combined with the incredible strength in Azure, makes me believe this sell-off is probably overdone, especially when you consider Microsoft's current valuation.
Based on Microsoft's trailing-12-month earnings of $16.79 per share, its stock trades at a price-to-earnings (P/E) ratio of just 22.5. That is a steep discount to its 10-year average of 32.7, so it looks undervalued right now.
MSFT PE Ratio Chart
MSFT PE Ratio data by YCharts
Microsoft stock is also much cheaper than the Nasdaq-100 technology index, which has a P/E ratio of 34.4. That suggests it might be undervalued compared with a basket of its big-tech peers. Furthermore, its price-to-sales ratio of just 8.9 makes it substantially cheaper than SpaceX.
SaaS companies like Microsoft deliver more than just raw software products. They also provide the data centers, security, and technical support necessary to make their products commercially viable. It's only profitable to maintain all of this infrastructure at scale -- in other words, the costs involved with building replicas of legacy software products would be prohibitive for the average business.
As a result, I wouldn't bet on Microsoft's demise. In fact, I think its stock has far more upside potential from the current price than an incredibly expensive name like SpaceX.
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
Source: “AOL Money”
