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Investing in the Future: 2 AI Giants for a Decade-Long Play

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Investing in the Future: 2 AI Giants for a Decade-Long Play

Artificial intelligence (AI) has surged in popularity, yet savvy investors recognize that the real jackpot may lie in the long run. By selecting top-notch AI companies and holding onto them as they navigate through a potential AI revolution, investors can stand to gain substantial rewards.

This technology holds the power to reshape various industries, but the transformation will be gradual. This means that AI companies have the potential to capitalize at every stage of the journey.

Two standout companies are poised to be excellent long-term investments due to their pivotal roles in driving AI initiatives. These companies are at the forefront, providing the essential chips, servers, and other critical elements that fuel AI innovations–leading to significant profit growth in recent times.

Let’s delve deeper into these two AI powerhouses to consider for a decade-long investment strategy.

An investor smiles while working on a laptop at home.

Image source: Getty Images.

Nvidia: Accelerating AI Innovation

Nvidia‘s (NASDAQ: NVDA) GPUs stand at the helm of AI advancements. These GPUs drive the training and inference processes critical for the future efficacy of AI models in tackling complex problems. Nvidia’s GPUs are touted as the fastest available, and the company shows no signs of slowing down. It continues to invest in research and development to maintain its leading position.

These endeavors are paying off. Nvidia is set to unveil its new H200 chip in the second quarter of this year, with plans for a new chip architecture named ‘Blackwell,’ along with the B100 chip potentially launching later this year. Currently, Nvidia commands an 80% share in the AI chip market, with its dominance expected to persist due to its strong brand and unwavering commitment to innovation.

Furthermore, Nvidia doesn’t just stop at selling chips–the company offers an array of AI products and services, available through major cloud giants like Amazon‘s Amazon Web Services (AWS) and Microsoft Azure. With a comprehensive platform and deep expertise in AI, Nvidia has emerged as the preferred provider for companies venturing into AI projects.

This expertise has propelled Nvidia to report record earnings, with sales and net income soaring by triple digits. Despite the surge in Nvidia’s stock price, it still trades at a modest 36 times forward earnings estimates–a reasonable valuation considering its dominance in this high-growth sector.

Super Micro Computer: The Unsung Hero of AI Infrastructure

Super Micro Computer (NASDAQ: SMCI) emerges as another unsung hero in the AI realm. While the company boasts a 30-year legacy, its earnings and stock performance have recently soared, primarily fueled by its AI ventures. Supermicro delivers servers, workstations, full rack scale solutions, and more to clients in the AI domain.

Several factors set Supermicro apart. The company adopts a building block architecture, enabling it to swiftly assemble products by utilizing common components across platforms. This approach enables quick integration of cutting-edge technologies into its offerings. Moreover, Supermicro collaborates closely with top chip manufacturers, including Nvidia, ensuring it remains abreast of upcoming chip releases, thereby promptly offering the latest innovations in its products.

Supermicro provides clients with diverse configuration options, allowing them to tailor orders to their specific requirements.

These strategies have propelled Supermicro to massive success within the AI market. Recently, the company reported its first $3 billion quarter–surpassing its total revenue for the entire year in 2021.

CEO Charles Liang noted that the company’s expanding customer base is driving increased demand, predicting sustained AI growth for many quarters, even years to come. If his forecast holds true, Supermicro’s earnings and stock performance may just be in the nascent stages of growth.

While Supermicro trades at 54 times forward earnings estimates, the price, though seemingly high, aligns as fair for a company playing a pivotal role in a burgeoning industry. Supermicro’s distinctive approach positions it to continue succeeding in the long haul.

Investing in Nvidia: What You Need to Consider

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, serves on The Motley Fool’s board of directors. Adria Cimino holds positions in Amazon. The Motley Fool has stakes in and endorses Amazon, Microsoft, and Nvidia. The Motley Fool suggests the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool maintains a disclosure policy.

The opinions and views expressed herein belong to the author and may not represent those of Nasdaq, Inc.