According to projections from Grand View Research, the artificial intelligence (AI) market will experience compound annual growth of 37% through 2030. This trajectory would see the sector reach an annual market value of nearly $2 trillion. by the end of the decade. With so much growth on the horizon, it would be wise to dedicate a portion of your portfolio to companies that can capitalize on this burgeoning industry.
The launch of OpenAI's ChatGPT in November 2022 has reignited interest in AI and highlighted how far the technology has come. AI can support countless industries, including healthcare, consumer technology, productivity software, cloud computing, and autonomous vehicles.
However, it will take time for AI to expand its reach and for businesses to fully realize its potential. While this process continues, here are two interesting AI stocks you can buy and hold over the next decade.
The rise of AI last year has highlighted NvidiaIt is (NASDAQ:NVDA) activity as its cutting-edge chips have become the hardware of choice for AI developers and cloud infrastructure providers around the world.
Its years of dominance in graphics processing units (GPUs), the chips needed to train AI models, have positioned it to immediately begin supplying hardware to countless AI-minded companies as the market was exploding. Nvidia has gotten a head start on competitors like AMD And Intel and captured an estimated 80-95% market share in AI GPUs.
Soaring chip sales have sent Nvidia's revenue, operating profit and free cash flow soaring over the past year, propelling its stock up more than 215%. From the company free movement of capital reached over $17 billion, significantly more than AMD's $1 billion and Intel's negative $14 billion.
So despite new GPU releases from these two competing chipmakers, Nvidia's early AI advantages have potentially pushed it further, with greater cash reserves to continue investing in its technology and retain its supremacy in the market.
Nvidia's price to free cash flow ratio and price/earnings ratio have declined by double-digit percentages over the past six months. And when it comes to these metrics, the lower the number, the better the value.
As a result, now is the perfect time to make a long-term investment in Nvidia that will allow you to benefit from the ever-increasing demand for its AI GPUs.
Actions of Amazon (NASDAQ:AMZN) are up 65% since last February, driven in part by its significant financial growth and exciting prospects in the AI space.
The company released its fourth-quarter results last week. Revenue rose 14% year over year to $170 billion, beating Wall Street estimates by nearly $4 billion. At the same time, its earnings per share reached $1.00, compared to expectations of $0.80.
Over the past 12 months, impressive growth has sent Amazon's free cash flow soaring 904% to $32 billion.
The tech giant's e-commerce business has also returned to growth. However, the best reason to invest in its stock is its highly profitable cloud platform, Amazon Web Services (AWS). As the world's leading cloud infrastructure provider, it has the potential to leverage its massive data centers and shift the generative AI market in its favor.
Over the past year, AWS has responded to the growing demand for AI services by expanding its offerings. For example, in September the company launched Bedrock, a tool that offers a range of models that customers can use to build generative AI applications. AWS also introduced CodeWhisperer, a platform that generates code for developers, and HealthScribe, a tool that can transcribe conversations between patients and doctors.
In fiscal 2023, AWS accounted for 67% of Amazon's operating profit, despite having the lowest revenue of its three segments. As it continues to expand its AI services, Amazon could enjoy a steady increase in profits in the long term.
Based on current estimates, Amazon's earnings could reach just under $7 per share over two fiscal years. Multiplying this number by its forward P/E of 41 gives a stock price of $279. So, if the projections are correct and the forward ratio remains the same, Amazon shares will rise 65% by fiscal 2026.
All of this makes Amazon one of the best AI stocks to buy now and hold for the next decade and beyond.
Should you invest $1,000 in Nvidia right now?
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Daniel Cook has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Advanced Micro Devices, Amazon and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short February 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.
2 Artificial Intelligence (AI) Stocks You Can Buy and Hold for the Next Decade was originally published by The Motley Fool