AI Investment Opportunities: Amazon and Alphabet Lead the Charge
The buzz surrounding artificial intelligence (AI) over the past years is well justified. This technology has the capability to transform daily routines, enhance factory management, and innovate product development. Companies looking to capitalize on the AI surge have poured billions into this technology, aiming to change the landscape of various industries.
AI’s beneficiaries include developers of AI products who sell these to consumers, businesses that harness AI to streamline their operations, and firms that experience benefits from both avenues.
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Two companies stand out as initial winners in the AI sector. Below we explore how these firms are leveraging AI for profit growth.
Image source: Getty Images.
Amazon’s AI-Driven Growth
Amazon (NASDAQ: AMZN) is excelling in both e-commerce and cloud computing. With over 200 million subscribers in its Prime service, Amazon utilizes AI to enhance customer experiences. The technology helps design efficient delivery routes and optimize operations in fulfillment centers, which reduces costs and boosts profitability.
Through Amazon Web Services (AWS), it provides premium AI tools from partners like Nvidia and its own AI solutions. This allows businesses to integrate AI effectively, which bodes well for AWS, the leading cloud services provider. AWS achieved an impressive $115 billion annual revenue run rate last year, a clear indicator of strong demand.
With nearly $60 billion in net income last year, Amazon’s commitment to AI-driven efficiency and product sales positions it for continued growth, making it an appealing option for investors looking to capitalize on the AI trend.
Alphabet’s AI Advancements
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) mirrors Amazon in utilizing AI to enhance a robust business model. Its Google Cloud division, akin to AWS, sells AI products to customers.
Alphabet has developed its own AI model, Gemini, which is instrumental in its AI operations. Many users recognize Gemini as a popular AI assistant, contributing to daily tasks. Additionally, Gemini helps improve Google Search, the company’s main revenue generator. Advertising revenues derived from the platform play a significant role in Alphabet’s financial health.
AI is enhancing Google Search’s functionalities, thereby benefiting advertisers in their campaign planning. Google Cloud’s AI offerings led to a 30% increase in revenue last quarter, reaching $12 billion. Notably, new client acquisitions surged, with the number of first-time deals doubling year-over-year, as did large contracts exceeding $250 million.
The advancements in AI usage and development place Alphabet in a strong position to leverage the growing market, making it an equally attractive long-term investment in the AI arena.
Should You Invest $1,000 in Amazon Now?
Before purchasing shares in Amazon, you might consider some advice:
The Motley Fool Stock Advisor analysts recently identified what they believe are the 10 best stocks for investors right now, and Amazon did not make the list. The selected stocks are expected to generate significant returns in the coming years.
For context, consider this: if you invested $1,000 in Netflix when it was recommended on December 17, 2004, your investment would be worth $495,226 today!*
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*Stock Advisor returns as of April 10, 2025
Suzanne Frey, an executive at Alphabet, and John Mackey, former CEO of Whole Foods Market, are members of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon. The Motley Fool recommends Alphabet, Amazon, and Nvidia. Please see their disclosure policy for more details.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
