Artificial intelligence (AI) stocks offer an attractive investment theme as we are at the beginning of what could be a game-changing story. It could potentially change the way we manage our daily tasks, make businesses more efficient and lead to major discoveries in areas such as healthcare. JPMorgan Chase CEO Jamie Dimon has even compared AI to transformations such as the printing press and electricity.
This means that getting into certain high-potential AI companies today – when their shares are reasonably priced – could be a once-in-a-decade investment opportunity. The AI market is predicted to grow from $200 billion today to potentially $1 trillion by 2030, and the stock prices of these companies could rise as more investors recognize the profit potential. As a result, the shares could become much more expensive than they are now.
That’s why now is the perfect time to look for solid AI players, and these two should be at the top of your buying list.
Image source: Getty Images.
Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) is probably best known for its crown jewel, Google Search. The search engine is the number 1 in the world, with a share of more than 90%, and that means a source of income for Alphabet. Advertisers are flocking to the platform to reach Google Search users, generating billions of dollars in revenue for the company.
In recent years, Alphabet has jumped into the world of AI, using the technology to improve Google Search and selling its AI tools to customers of Google Cloud, its cloud computing business. So AI can help Alphabet attract more advertising dollars as Google Search becomes even more powerful and we spend more time on it… and AI is already generating revenue for Alphabet through its cloud business.
In fact, Alphabet said during its latest earnings report that its AI infrastructure and generative AI solutions have already brought in billions of dollars in revenue this year. The cloud business delivered double-digit revenue growth and triple-digit operating profit growth this quarter, reaching the $10 billion and $1 billion milestones respectively.
Meanwhile, Alphabet shares remain reasonably priced and trade at 21x forward earnings estimates, offering a great opportunity to get in early on this potentially explosive AI growth story.
Metaplatforms(NASDAQ: META) CEO Mark Zuckerberg has been very clear about his AI ambitions. His goal is to make Meta an AI leader, and he has poured investment dollars into developing large language models, training them and using them to fuel products like AI assistants. Zuckerberg says he hopes Meta will one day offer user assistants for all their needs, from casual to professional.
We should expect other AI-based products and services from Meta, given the company’s commitment to exploring the technology. Meta has made AI its biggest area of investment this year, with the company bringing on board 600,000 graphics processing units. The technology giant is one of the most important customers of top chip designer, Nvidiaand has also developed its own chips as it fully embraces this technology.
It’s also important to remember that as Meta invests in this fast-growing area, the company continues to generate billions of dollars in revenue through its ownership of Facebook, Messenger, WhatsApp and Instagram. Like Alphabet, it gets most of its revenue from advertising, and like Alphabet, if AI helps improve its product – in this case, social media apps – advertising revenue could increase.
Today, Meta stock trades for 27x forward earnings estimates, which seems like an absolute steal considering the company’s position in the fast-growing AI space and its solid earnings history and financial position. This year, Meta even started paying a dividend. , showing that the country can afford to finance growth and reward shareholders. And all this means that this could now be a valuable opportunity to participate in this top AI story.
Have you ever felt like you missed the boat on buying the most successful stocks? Then you would like to hear this.
On rare occasions, our expert team of analysts provides a “Double Down” Stocks recommendation for companies they think are about to pop. If you’re worried that you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
Amazon: If you had invested $1,000 when we doubled in 2010, you would have $21,365!*
Apple: If you had invested $1,000 when we doubled in 2008, you would have $44,619!*
Netflix: If you had invested $1,000 when we doubled in 2004, you would have $412,148!*
We’re currently issuing ‘Double Down’ warnings for three incredible companies, and another opportunity like this may not happen anytime soon.
See 3 “Double Down” Stocks »
*Stock Advisor returns October 21, 2024
Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Adria Cimino has no positions in the stocks mentioned. The Motley Fool holds positions in and recommends Alphabet, JPMorgan Chase, Meta Platforms and Nvidia. The Motley Fool has a disclosure policy.
A once-in-a-decade investment opportunity: Two artificial intelligence (AI) stocks to buy now was originally published by The Motley Fool
