MSFT & EXPE: Dividend Growth Stocks for AI Era

In an investment landscape often dominated by hype around hyper-growth companies with rocketing sales and no profits, Microsoft (NASDAQ:MSFT) and Expedia (NASDAQ:EXPE) stand out as mature growth titans that combine impressive earnings growth with reliable capital returns to shareholders. These companies have established track records of dividend increases and share buybacks while maintaining their ability to dominate in emerging technological fields, particularly artificial intelligence. The Magnificent Seven companies have demonstrated that size and maturity don’t preclude substantial growth, especially in the AI era where deep pockets enable massive infrastructure investments, organic innovations, talent acquisition, and strategic bets in promising private AI ventures.

For investors seeking greater predictability and reduced volatility, these dividend-paying growth companies offer a compelling alternative to speculative tech plays. With Microsoft yielding 0.71% and Expedia offering 0.73% in dividends, both companies provide income generation alongside growth potential. Their established market positions and financial resources position them to leverage AI technology more effectively than smaller competitors, creating a virtuous cycle where scale enables innovation, which in turn reinforces market dominance. This combination of income stability and growth potential makes them particularly attractive for investors looking to participate in the AI revolution without assuming excessive risk.

Microsoft stands as a prime example of a mature growth company leveraging its scale for AI dominance. The company’s 23% year-to-date gain, while modest compared to some speculative plays, represents sustainable growth that outpaces the Nasdaq 100’s 18% return. After shares stabilized following a summer surge past $510, the current valuation appears attractive given the numerous AI catalysts on the horizon. With the company approaching a $4 trillion market capitalization, Wedbush Securities analyst Dan Ives projects Microsoft will reach the $5 trillion milestone and eventually $6 trillion as AI workloads drive Azure’s expansion.

The company’s AI strategy encompasses multiple fronts, including significant momentum in AI cloud services, the powerful GitHub Copilot coding platform, and the recent launch of Xbox Cloud Gaming from beta to a free global offering. These initiatives demonstrate Microsoft’s comprehensive approach to embedding AI throughout its software ecosystem. The upcoming quarterly earnings report in approximately two weeks could serve as a catalyst for significant stock movement, given the market’s focus on AI implementation progress. Microsoft’s ability to integrate AI across its diverse product portfolio while maintaining dividend growth makes it a standout choice for investors seeking both stability and exposure to the AI transformation.

Expedia represents another tech-driven dividend grower positioned to capitalize on AI advancements in the travel industry. Trading at 26.9 times trailing price-to-earnings, the company’s valuation appears reasonable, particularly considering the strong guidance management provided recently. The stock has garnered attention from prominent market voices, including Mad Money host Jim Cramer, who favors Expedia over other travel sector investments. This endorsement reflects confidence in the company’s strategic direction and execution capabilities.

Expedia’s AI initiatives, including its AI travel assistant and Smart Trip AI features, are poised to revolutionize the travel booking experience. As these technologies improve, Expedia stands to capture significant market share from competitors slower to adopt transformative AI solutions. The company’s momentum in gross bookings, combined with generative AI’s potential to simplify travel planning for consumers, creates a powerful growth narrative. Despite concerns about potential U.S. employment fluctuations affecting travel demand, Expedia’s AI-enhanced platform positions it to maintain growth through improved customer experiences and operational efficiency.

Both Microsoft and Expedia demonstrate that investors don’t need to sacrifice growth for income or vice versa. Their dividend yields, while modest in absolute terms, represent growing income streams backed by sustainable business models and AI-driven expansion opportunities. This combination is particularly valuable in current market conditions, where speculation in unprofitable tech companies has created potential bubbles in certain segments.

The investment case for these companies extends beyond their current financial metrics to their strategic positioning for the AI era. Microsoft’s deep investments in AI infrastructure and Expedia’s deployment of AI in travel booking represent sustainable competitive advantages that smaller competitors cannot easily replicate. For investors concerned about market volatility and seeking exposure to AI growth trends, these mature dividend payers offer a balanced approach that combines the stability of established companies with the growth potential of technological innovation. Their reasonable valuations, strong management guidance, and clear AI strategies make them compelling choices for 2026 and beyond.