The Rising Tide of AI Stocks: Two Leaders Worth Considering

Artificial intelligence (AI) stocks present a unique investment opportunity as we stand on the brink of a technological revolution. AI has the potential to transform everyday tasks, enhance corporate efficiencies, and drive significant innovations in critical sectors like healthcare. JPMorgan Chase CEO Jamie Dimon has compared the impact of AI to historical breakthroughs like the printing press and electricity.

Investing in promising AI companies now, while they are still affordably priced, could represent a rare investment chance in the next decade. The AI market is projected to expand from $200 billion currently to nearly $1 trillion by 2030. As more investors recognize the growth potential, stock prices of these companies could rise sharply.

The current landscape makes it an ideal time to seek out reliable players in the AI market, and here are two companies to consider.

Image source: Getty Images.

1. Alphabet

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is widely recognized for its flagship product, Google Search—a platform that dominates with over 90% market share. This stronghold has translated into substantial revenue, as advertisers flock to reach Google users.

In recent years, Alphabet has actively incorporated AI across its services, enhancing Google Search and offering AI solutions through Google Cloud. This meant that as Google Search improves, Alphabet could attract even more advertising dollars. Notably, AI is already benefitting Alphabet’s cloud business financially.

During its last earnings report, Alphabet noted that its AI Infrastructure and Generative AI Solutions brought in billions this year. The cloud segment achieved double-digit revenue growth, reaching milestones of $10 billion in revenue and $1 billion in operating profit for the quarter.

Currently, Alphabet’s shares trade at a forward earnings multiple of 21, making it an attractive opportunity to invest early in its potential AI growth trajectory.

2. Meta Platforms

Meta Platforms (NASDAQ: META) CEO Mark Zuckerberg has openly discussed his ambitions for AI, aiming to position Meta as a leader in this field. The company has invested heavily in developing large language models and employing them in products like AI assistants. Zuckerberg envisions a future where Meta will provide users with assistants that meet a wide range of needs, from entertainment to work.

Meta has prioritized AI as its primary investment focus this year, acquiring 600,000 graphics processing units and collaborating with leading chip manufacturer, Nvidia. Additionally, Meta is developing its own chips, emphasizing its commitment to advancing AI technology.

It’s worth noting that as Meta invests in this high-growth area, it continues to generate substantial earnings from platforms like Facebook, Messenger, WhatsApp, and Instagram. The majority of its revenue comes from advertising, meaning improvements through AI could lead to increased advertising income.

Meta’s shares are currently priced at 27 times forward earnings estimates, presenting a strong investment considering the company’s position in the fast-growing AI sector and its solid earnings history. This year, Meta also began issuing dividends, signifying its ability to fund growth while rewarding investors. Thus, now may be an opportune moment to consider investing in this significant AI development.

A Second Chance at Lucrative Opportunities

Have you ever felt like you missed out on investing in successful stocks? If so, pay attention now.

Occasionally, our team of expert analysts provides a “Double Down” stock recommendation for companies poised for significant growth. Now may be the ideal time to invest before these chances pass. Here are some past successes:

• Amazon: An investment of $1,000 in 2010 would now be worth $21,365!*
• Apple: A $1,000 investment in 2008 would have grown to $44,619!*
• Netflix: A $1,000 investment in 2004 could be worth $412,148!*

Currently, we are issuing “Double Down” alerts for three exceptional companies, and opportunities like this may not come again soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 21, 2024

Suzanne Frey, an executive 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, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, JPMorgan Chase, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.