Investing in AI: A Look at Meta and Amazon

Artificial intelligence (AI) emerged as a dominant theme in investing for 2024, signaling an ongoing growth narrative rather than a fleeting craze. Developing and applying AI technology requires time, and we are still in the initial chapters of this expansive story. Last year focused on constructing AI infrastructure, a trend that shows no signs of slowing.

As we enter the next phase, businesses are increasingly integrating AI into their operations. A prime example is agentic AI, which allows software to analyze problems, devise solutions, and implement them. Analysts project that today’s $200 billion AI market could surpass $1 trillion by 2030, indicating promising revenue growth for certain industry players.

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This context highlights AI as a long-term investment opportunity, provided you select stocks poised to benefit from the various phases of AI advancement. Let’s explore two stocks that may be worth holding for the next decade.

Image source: Getty Images.

1. Meta Platforms

Meta Platforms (NASDAQ: META) is boldly pursuing its AI ambitions. The company has declared that AI will be its largest investment area in 2024, and during its latest earnings call, it hinted at heightened spending on AI infrastructure this year. CEO Mark Zuckerberg envisions creating AI assistants for all users of Meta’s applications—Facebook, Messenger, Instagram, and WhatsApp—across both personal and professional activities.

Initiating this journey, the company launched its first assistant, Meta AI, which has seen rapid adoption, boasting over 500 million monthly active users. Powered by Meta’s own large language model, Llama, the company has made Llama open-source, allowing others to use and contribute to its development. This strategic decision positions Meta as a potential leader in the AI field.

How does this lead to increased revenue? The rollout of assistants and other products could keep users engaged for longer periods, which would attract advertisers—Meta’s principal revenue source—to spend more on advertising. Additionally, Meta’s commitment to AI may spur the creation of new revenue streams in the future.

Meta is committed to AI and is currently profitable, with revenue growth driven by its social media operations. Consequently, its stock is a strong candidate for any growth-focused portfolio.

2. Amazon

Amazon (NASDAQ: AMZN) is already making waves in the AI landscape in two significant ways. Firstly, the company leverages AI to enhance efficiency and the customer experience across its e-commerce sector. Secondly, it offers AI solutions through Amazon Web Services (AWS), its cloud computing division.

As the leading e-commerce entity, Amazon generates substantial profits consistently. To maintain this momentum, it must keep operational costs low, and AI plays a crucial role in this strategy. For instance, AI aids in managing inventory and optimizing delivery routes.

Furthermore, Amazon has rolled out AI tools such as the Rufus shopping assistant, which helps customers save time and could foster repeat business.

Turning to AWS, it remains a standout in cloud services and has established a $110 billion revenue run rate largely due to its AI offerings. AWS excels in providing a wide range of AI products and services, accommodating various customer needs. For instance, budget-conscious clients can utilize Amazon’s own AI chips, while those with larger budgets can access premium GPUs produced by market leaders like Nvidia. AWS also features Amazon Bedrock, a comprehensive AI service that allows customers to develop AI agents.

Given these factors, investing in Amazon now seems beneficial as it continues to navigate the unfolding AI growth landscape.

Is Meta Platforms a smart $1,000 investment?

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, serves on The Motley Fool’s board of directors. Randi Zuckerberg, a former director at Facebook and sister of Meta’s CEO Mark Zuckerberg, is also on the board. Adria Cimino holds positions in Amazon. The Motley Fool has investments in and recommends Amazon, Meta Platforms, and Nvidia. For more details, please refer to The Motley Fool’s disclosure policy.

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