If I Had $1,000 to Invest Today, Here's the Trillion-Dollar Stock I'd Buy Instead of SpaceX

Space Exploration Technologies, which operates in the space transportation, satellite internet connectivity, and artificial intelligence (AI) infrastructure industries, went public on June 12. Its stock quickly rallied to a peak of $225, but it has since lost half of its value and closed at just over $108 on Friday, July 31.

But SpaceX still has a hefty market capitalization of $1.43 trillion. Since the company generated just $19.3 billion in revenue over the last four quarters, its stock remains at a sky-high price-to-sales ratio of 74, making it almost 12 times as expensive as the Nasdaq-100 technology index.

That means more downside could be ahead, which is why if I had $1,000 to invest today, I'd look elsewhere. Here's why I think Microsoft (NASDAQ: MSFT) will perform significantly better over the long term.

Image source: Getty Images.

Azure is growing at an accelerated pace

Azure is Microsoft's cloud computing platform, and offers hundreds of services to help businesses thrive in the digital era, whether they need simple data storage or complex software development tools. But it has also become a leading distribution platform for all of the tools enterprises need to develop and deploy AI software, and this is driving a new phase of revenue growth.

Running AI software requires a substantial amount of computing power, which is typically delivered by data centers, which house thousands of specialized chips called graphics processing units (GPUs). Most businesses don't have billions of dollars to build this infrastructure themselves, so they instead rent it from providers like Azure and only pay for what they use.

Microsoft ended its 2026 fiscal year (which wrapped up on June 30) with a staggering $678 billion order backlog from customers who were waiting for Azure to bring more data center capacity online, an 84% year-over-year increase. The company built 88 new data centers worldwide over the last 12 months as part of a two-year plan to double its infrastructure footprint, but it will have to continue building aggressively if it wants to convert that massive backlog into revenue.

Azure offers a platform called Foundry that makes it easy to combine data center compute with a selection of over 11,000 ready-made large language models (LLMs) from leading developers like OpenAI. This gives businesses plenty of options for rapidly building AI agents, AI chatbots, and other AI software applications.

Azure's total annual revenue surpassed $100 billion for the first time in fiscal 2026, and in the fourth quarter, the platform posted a whopping 43% year-over-year growth. It was the second consecutive quarter in which that growth rate accelerated, highlighting the cloud provider's incredible momentum.

Copilot for 365 has a record number of enterprise users

Microsoft is also kicking major AI-related goals outside of Azure. The company has been integrating its Copilot virtual assistant into legacy software products like Windows, Bing, Edge, and the 365 productivity suite (which includes Word, Excel, and PowerPoint), where it's experiencing rapid uptake.

As of June 30, companies all over the world were paying for 30 million Copilot for 365 licenses, which was a 50% increase from March 31, just three months earlier. But that represents a mere fraction of the opportunity at hand, because companies pay for over 400 million 365 licenses for their employees, and all of them are candidates for the Copilot upgrade. In other words, Copilot could bring in billions of dollars in annual revenue as adoption ramps up -- and that's just from 365 alone.

By using its existing portfolio of software products to sell Copilot, Microsoft has a massive advantage over pure-play AI companies like OpenAI and Anthropic, which have to acquire customers from scratch.

Microsoft stock trades at an attractive price

Microsoft stock soared by 15% on July 30, the first trading day after it reported its fiscal 2026 results. Nevertheless, based on the company's annual earnings of $17.65 per share, its stock is still trading at an attractive price-to-earnings (P/E) ratio of just 25.1. That's a 21% discount to its five-year average of 32.3.

Data by YCharts.

Microsoft is also much cheaper than the Nasdaq-100 index, which has a P/E ratio of 33.1. That suggests it's probably still undervalued compared to a basket of its big-tech peers. Moreover, with a price-to-sales ratio of 10.1, Microsoft is dramatically cheaper than SpaceX.

As a result, even after its recent rally, I still think Microsoft stock has significantly more upside potential than SpaceX from here.

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool has a disclosure policy.