These companies are on a growth trajectory that could deliver big benefits over the next few years.
If you follow technology or stock market news at all, you may be tired of reading about artificial intelligence (AI). Since the launch of OpenAI’s ChatGPT in early 2023, the technology has been featured in countless headlines. This advanced chatbot has reignited interest in AI, highlighting its potential to improve many industries and motivating companies across the technology industry to pivot their operations to emerging markets.
But whether you’re suffering from AI fatigue or not, it’s still hard to deny the potentially lucrative opportunities that investing in AI brings. Despite massive investments over the past year, the market is still in its infancy. Generative technologies are being applied to many industries, including healthcare, education, consumer technology, cloud computing, and productivity software. Perhaps the best uses for AI have yet to be thought of.
As a result, AI may still have a lot to offer businesses and new investors, so here are two artificial intelligence stocks that could make you rich.
1. Advanced Micro Devices
Despite years of success in the chip market, the AI boom Advanced Micro Devices (AMD 0.90%) As demand for AI models surged last year, so did demand for graphics processing units (GPUs), the high-performance chips that enable AI.
AMD is no stranger to the GPU industry, having the second largest market share ( NVIDIANVIDIA has had a lead in desktop GPUs for years, but Nvidia was able to get ahead by quickly supplying GPUs to AI developers in 2023, while AMD has been slow to catch up.
AMD’s focus on central processing units (CPUs) for many years has seen the company reach record heights, with AMD consistently taking market share in CPUs. Intel Since 2017, that share has increased from 20% to 34%.
Meanwhile, AMD’s business has proven to be much more efficient than Intel’s: Intel boasts a 76% market share in datacenter CPUs and is on track to generate $3 billion in revenue in the second quarter of 2024, while AMD’s server CPU business generated $2.8 billion in revenue over the same period, but only a 24% market share.
And now AMD is making promising progress with its AI GPUs: The company will launch new GPUs in 2024 to take on Nvidia, MicrosoftAzure, Meta Platformand Oracle The expansion of AI is already paying off, with AMD’s data center division seeing revenue grow 115% in the second quarter of 2024, a record for the chipmaker.
AMD’s stock price has risen over 376% over the past five years, and AI could help it rise even more over the next five. The company has a high forward price-to-earnings (P/E) ratio of 44, but that number is below the metric’s trailing 12-month average. Given the huge potential in AI, AMD is worth considering now.
2. Apple
apple (AAPL -0.05%) The company has taken a more low-key approach to AI than many others, and Apple is finally gearing up to launch its most significant AI product yet as companies like Microsoft and Alphabet make serious inroads in the space in 2023. But its strong brand and vast cash reserves could soon enable the company to assume a powerful role in the space.
This fall, the tech giant will unveil Apple Intelligence, the name for a series of AI updates to its product lineup. The software overhaul will add language, imaging and speech generation capabilities to iPhones, Macs and iPads. Apple Intelligence follows the September launch of the iPhone 16, the company’s first AI-enabled smartphone.
Apple has made Apple Intelligence available only on its newer, more powerful devices, so iPhone users will need an iPhone 15 Pro or later to access the new AI features, while Macs and iPads will need the M1 to M4 chips.
Apple has seen repeated declines in product segments over the past year amid generally weak consumer purchasing power and declining market share in key markets like China, but its fiscal 2024 third-quarter earnings results, which ended June 29, suggested that new AI-focused product releases could boost sales.
Revenue for the quarter increased 5% year over year, boosted by a 24% increase in iPad sales due to the launch of new iPad Air and Pro models in May, the first new iPad launches since 2022. As a result, other product refreshes will likely drive further sales growth in the coming months, especially driven by AI.
Competitors like Microsoft Amazonand alphabet So far, the focus has been primarily on the business side of AI, but Apple’s prioritization of getting AI into the hands of consumers could play a major role in securing a strong position in the industry.
Apple’s forward P/E is high at 34. But with $104 billion in free cash flow and a strong brand, Apple stock remains an attractive AI investment that could generate huge wealth.
Randi Zuckerberg, former director of market development and public relations at Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of The Motley Fool’s board of directors. Alphabet executive Suzanne Frey is a member of The Motley Fool’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Meta Platforms, Microsoft, NVIDIA, and Oracle. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short August 2024 $35 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
