Artificial intelligence (AI) is on everyone’s lips and is likely to be one of the hottest areas of investment today. Why? The technology has the potential to transform many industries, save companies time and money, and even lead to life-saving discoveries such as better medicines and medical devices. Analysts expect the AI market to surpass $1 trillion by the end of the decade.
Even though many AI stocks have risen sharply, that doesn’t mean you’re missing out if you haven’t already invested in this exciting field. The AI growth story is just beginning, meaning there is still plenty of room for the strongest players to evolve over time. So if you’re ready to invest in AI, check out these two stocks that offer good long-term opportunities.
1. Amazon
You probably know Amazon (NASDAQ:AMZN) The company is best suited for its e-commerce business, but the company is also expanding its presence in the world of AI. For example, it uses the technology to streamline processes in logistics centers and better serve customers. But where Amazon is really betting on AI is in the company’s cloud computing business, Amazon Web Services (AWS).
“We are optimistic that much of this world-changing AI will be built on AWS,” wrote CEO Andy Jassy in Amazon’s most recent shareholder letter. He also said that generative AI may be the most groundbreaking technology since the Internet.
Jassy says Amazon is investing “heavily” in the three layers that make up AI – over time, this could make AWS the go-to place for companies looking to start AI projects. These layers include the building blocks for base models such as chips and software, a fully managed service for customers who want to use an already existing base model, and finally AI-driven applications.
Because AWS is now the world’s leading cloud computing company, it is perfectly positioned to sell these solutions to customers and become an AI giant.
And when you buy Amazon stock, you have access to a high-growth space, but also the security of booming e-commerce and cloud businesses that helped the company achieve double-digit revenue growth and net income of over $30 billion last year have helped. All of this makes Amazon stock, which trades at 44 times forward earnings estimates, worth its price.
2. Metaplatforms
Metaplatforms (NASDAQ:META) is another company that can be an important part of your daily life – if you use Facebook, Messenger, WhatsApp or Instagram. This social media giant owns all four apps and generates billions of dollars in advertising revenue every year thanks to these apps. Chances are this will continue, as two things in particular should keep users coming back to Meta and therefore keep advertisers coming back to reach them.
First, Meta has a strong competitive advantage in the world of social media, and that is its wide audience of loyal users – which makes it difficult for any of us to switch to another platform. If we do this, we may not be able to get in touch with all of our contacts. Meta estimates that more than 3.1 billion people use at least one of its apps every day.
Here is the second reason why Meta should stay on top. The company is placing a focus on AI, making the technology its largest area of investment this year. Chief Executive Mark Zuckerberg says he wants to bring on board about 600,000 graphics processing units (GPUs) this year to ensure enough capacity for the company’s projects.
Meta’s plan includes introducing AI tools to all of its products and services to make them increasingly better for both recreational and professional use. And Meta, developer of the large language model Llama, is keeping its software open source so it can become the industry standard – another positive point for the company. Taking this and Meta’s track record of earnings growth into account, the stock looks cheap at 26x forward earnings estimates – and represents a solid AI bet to buy and hold for the long term.
Don’t miss this second chance at a potentially lucrative opportunity
Have you ever felt like you missed the boat when it came to buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts will provide one “Double Down” shaft Recommendation for companies that they think are about to collapse. If you’re worried you’ve already missed your investment opportunity, now is the best time to buy before it’s too late. And the numbers speak for themselves:
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Amazon: If you had invested $1,000 when we doubled in 2010, You would have $20,963!*
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Apple: If you had invested $1,000 when we doubled in 2008, You would have $33,315!*
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Netflix: If you had invested $1,000 when we doubled in 2004, You would have $335,887!*
Right now we’re issuing “Double Down” warnings for three incredible companies, and such an opportunity may not happen again in the near future.
See 3 “Double Down” Stocks »
*Stock Advisor returns from April 8, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Adria Cimino holds positions at Amazon. The Motley Fool has positions in and recommends Amazon and Meta Platforms. The Motley Fool has a disclosure policy.
Are you ready to invest in artificial intelligence (AI)? 2 stocks that are a solid bet. was originally published by The Motley Fool