Amidst the technological forefront lies the raging fire that is artificial intelligence (AI), serving as the propellant behind the Nasdaq Composite’s remarkable 43% surge in 2023. Wall Street’s keen interest in tech stocks poised for immense gains from the AI sector has been palpable, taken aback by the growth in the industry.
The AI domain, having touched nearly $200 billion in 2023 according to Grand View Research, shows no signs of slowing down. Forecasts indicate a steady upward trajectory, with a projected compound annual growth rate of 37% until at least 2030. The extrapolation propels the market to almost $2 trillion by the decade’s end, manifesting an impressive journey thus far.
Transforming lives and businesses alike, AI remains a beacon of hope in numerous sectors like consumer tech, cloud computing, autonomous vehicles, e-commerce, and beyond. The realm is pressure-cooking with opportunities to not only expand horizons but to potentially mint millionaires along the way.
Here, we delve into two AI stocks with promising trajectories that might pave the way to wealth.
The First Bet: Advanced Micro Devices
Shining in the limelight of the AI revolution are the chip stocks, basking in the soaring demand for AI services triggering a boom in graphics processing unit (GPU) sales essential for training and operating AI models.
A notable frontrunner in the GPU sphere is Nvidia, basking in unprecedented success with a 296% surge in stock value over the past year, fueled by escalating chip sales. Despite Nvidia’s dominance hitherto, alternatives in the market promise substantial growth over the long haul.
One standout contender is Advanced Micro Devices (AMD) (NASDAQ: AMD), securing the second-largest GPU market share and exhibiting robust potential in the AI realm.
Notably, the company unveiled the MI300X AI GPU last December, a testament to its ambition to rival Nvidia’s offerings. Acknowledged by tech juggernauts like Microsoft and Meta Platforms, AMD is all set to redefine AI computing standards.
Moreover, with a strategic focus on AI-powered PCs, AMD anticipates a surge in PC shipments, as per IDC projections, boosted by AI integration poised as a primary growth catalyst. In fact, Canalys predicts that 60% of all PCs shipped in 2027 will be AI-enabled.
Data by YCharts
Illustrating AMD’s promising trajectory, the chart hints at a potential earnings per share exceeding $7 in the upcoming two fiscal years. With a forward price-to-earnings ratio of 53, the stock’s value could escalate to $383, marking a 96% increment by fiscal 2026.
A convergence of multiplying prospects in AI, AMD’s stock presents a compelling case for aspiring millionaires looking for the right investment move.
The Second Contender: Intel
Intel (NASDAQ: INTC), a giant grappling with market challenges, witnessed its once-dominant position in the central processing unit (CPU) domain slide from over 80% to 69% with competitors like AMD chipping away since 2017. The blow stung further when Apple shifted from Intel to in-house designs in 2020, sending Intel’s stock plummeting by 31% in the last three years.
However, adversity seems to have breathed new life into Intel, propelling the company forward. A strategic announcement last June signaled Intel’s intent for a “fundamental shift” in its business model, transitioning to an internal foundry system projected to save $10 billion by 2025.
The revamped strategy positions Intel akin to Taiwan Semiconductor Manufacturing, honing a business model more focused on efficient foundry capacity provision across North America and Europe. Noteworthy targets include a non-GAAP gross margin of 60% and an operating margin of 40%, steered by newfound efficiencies in the manufacturing paradigm.
Empowered by this restructuring and a robust AI focus, Intel unleashed a range of AI chips late last year. With offerings like Gaudi3 rivalling Nvidia’s GPU line, Intel flaunts Core Ultra processors and Xeon server chips, integrating neural processing units for efficient AI program execution.
Data by YCharts
Projecting Intel’s trajectory, the earnings forecast approximates just under $3 per share by fiscal 2026. With a forward P/E ratio of 32, this hints at a potential stock value reaching $96, translating to a substantial 123% growth in the upcoming two fiscal years.
Though a journey that demands patience, Intel’s profound potential places it as a compelling investment opportunity with prospective millionaire-making capabilities in the years ahead.
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Noteworthy to mention, Randi Zuckerberg’s association with The Motley Fool’s board adds a unique dimension to the insight shared. Dani Cook maintains no interest in the discussed stocks. The Motley Fool holds positions in and endorses Advanced Micro Devices, Apple, Meta Platforms, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. Intel receives a recommendation from The Motley Fool and advice on long and short options regarding Microsoft and Intel. The Motley Fool upholds a stringent disclosure policy.
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