The potential of AI has captured the imagination of everyone, and it's already leading to massive investments from big business. The IDC forecasts annual spending on AI software to reach $279 billion by 2027, or an increase of 31% per year.

If your portfolio needs an AI upgrade, (NASDAQ: MSFT) and Nvidia (NASDAQ: NVDA) have to be at the top of your buy list. These stocks have outperformed the Nasdaq Composite in 2023, and are up 56% and 220%, respectively. Here's why they will remain rewarding investments for years to come.

Shares of Microsoft are hitting new highs as the company rolls out AI tools across its software portfolio. It is offering a subscription to the AI Copilot assistant in Microsoft 365, while AI services are starting to pad the growth of the Microsoft Azure cloud computing business.

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Source Fool.com