Unleashing the Future: 5 Prominent Stocks Set to Benefit from the AI Boom

The excitement surrounding artificial intelligence (AI) is not without merit. AI is a transformative technology expected to reshape various industries and create new ones in the coming decades. A recent analysis by Bloomberg Intelligence predicts the market for generative AI could reach $1.3 trillion by 2032.

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This growth signifies a 43% annualized growth rate from today. Generative AI uses large language models (LLMs) like ChatGPT to create content, offering immense investment opportunities for leading companies equipped with essential technology. The five generative AI stocks highlighted here have shown remarkable returns while still offering growth potential. Investing now may be a wise decision for long-term investors.

1. Nvidia

To train AI models, substantial computing power is essential. Nvidia (NASDAQ: NVDA) supplies the necessary graphics processing unit (GPU) chips, making it a leader in AI model training.

The company has gained a competitive edge with its Hopper architecture (H100 chip) and is launching its next generation, Blackwell. Nvidia has experienced tremendous success over the past two years, and major investments from tech giants like Microsoft are set to fuel further growth in the AI sector.

Although Nvidia’s stock carries a forward price-to-earnings (P/E) ratio of 48, analysts project an average earnings growth of 38% annually in the long term. This leads to a price/earnings-to-growth (PEG) ratio of 1.3, suggesting that growth supports its valuation. While the stock may face some volatility after a strong performance over the last two years, its long-term outlook is bright.

2. Broadcom

Broadcom (NASDAQ: AVGO) is emerging as a key player in generative AI, producing chips suited for “hyperscalers” with many advanced projects underway. Although specific partnerships were not disclosed, reports indicate connections with firms like OpenAI and Apple.

In fiscal 2024, Broadcom’s AI-related revenue reached $12.2 billion. Management anticipates capturing significant market potential, projecting $60 billion to $90 billion in opportunities by 2027. Analysts forecast average earnings growth of 21% in the long term, making Broadcom an attractive buy at its current PEG ratio of 1.7.

3. Meta Platforms

Meta Platforms (NASDAQ: META) possesses a vast amount of user data across its platforms, which provides a competitive edge in training AI models. The company leverages its 3.29 billion social media users daily to enhance its AI model (Llama) for various applications.

Through generative AI, Meta has improved its digital advertising and is exploring AI-driven social media profiles to increase user engagement. Analysts predict earnings growth of 17% to 18% in the long term, presenting a good investment opportunity with a current PEG ratio of 1.3.

4. Alphabet

As Google’s parent company, Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) shares characteristics with Meta that position it well in the generative AI space. With its own AI model (Gemini) and extensive data from its services, Alphabet is positioned uniquely in the market.

Alphabet has been a major tech player even before the rise of AI, yet the company is now integrating generative AI into existing products. Analysts expect earnings growth of 16% to 17% annually, making its stock a bargain at just 21 times forward earnings.

5. Amazon

At first glance, Amazon (NASDAQ: AMZN) may not seem like a clear winner in generative AI; however, its Amazon Web Services (AWS) holds the title of the world’s largest cloud-computing platform, essential for any AI deployment.

With extensive first-party data from its customers and a network of over 100 million Alexa-enabled devices, Amazon is positioned to leverage generative AI across various sectors. Analysts forecast a 22% annual growth in earnings over the next three to five years, suggesting that now is an opportune time to invest at a forward P/E ratio of 36.

Seize This Opportunity Before It’s Too Late

Do you ever feel like you missed out on investing in successful stocks? Here’s your chance.

Our team of analysts has identified compelling “Double Down” stock recommendations for companies on the verge of significant growth. Don’t worry if you think you’ve missed your chance; the time to act is now, as evidenced by past successes:

• Nvidia: If you had invested $1,000 when we doubled down in 2009, you’d have $387,474! *
• Apple: A $1,000 investment from our 2008 recommendation would be worth $46,399! *
• Netflix: Those who invested $1,000 back in 2004 would now have $475,542! *

We are currently issuing “Double Down” alerts for three promising companies; opportunities like this don’t come often.

See 3 “Double Down” stocks »

*Stock Advisor returns as of January 6, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is also on the board. Randi Zuckerberg, a former director at Facebook and sister to Meta’s CEO, is similarly affiliated. Justin Pope holds no stock positions mentioned. The Motley Fool owns shares in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia, and recommends Broadcom as well.

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