If you have around $3,000 at your disposal, consider investing in two long-term AI-focused stocks.
In the modern era, artificial intelligence (AI) has experienced a significant surge, leading businesses to recognize its potential in reducing operational costs. Statista estimates the AI market to expand at an annual rate of 28%, reaching a staggering $826 billion by 2030.
Now might be an excellent opportunity for investors with extra cash, wishing to invest in companies benefiting from this AI revolution. Over the coming years, these growth stocks could witness exponential growth. The following two companies, considered reasonable investments, fit the criteria:
1. Advanced Micro Devices
Advanced Micro Devices (AMD), renowned for its graphics processing units (GPUs) and other chip products, plays a crucial role in the AI revolution. Companies need robust computing infrastructure to train AI models. AMD's Instinct MI300 GPUs, among its various offerings, exhibited impressive 122% year-over-year growth in data center revenue, making it the main revenue driver heading into 2025.
Furthermore, AMD's central processing units (CPUs) continue to thrive. Large businesses, such as Meta Platforms, use AMD's Epyc CPUs in their data centers, helping power their social media platforms. AMD invests heavily in research and development, hiring thousands of engineers, resulting in the launch of the MI300. They anticipate the AI accelerator market to reach $500 billion by 2028.
Last quarter, AMD earned a staggering 31% year-over-year increase in earnings and currently trades at a modest 24 times 2025 earnings estimates, suggesting possible undervaluation. Investors anticipate AMD's stock to rebound in the coming year, with a likelihood of delivering impressive returns.
2. Alphabet (Google)
Alphabet (Google) shares have garnered excellent returns over the last decade, with its investments in AI fueling the growth. Google spent a substantial $49 billion on capital expenditures over the past four quarters, contributing to data centers and AI research to foster further growth.
In 2022, Google announced improvements to its Gemini AI model, powering all its products, and unveiled its Willow chip for quantum computing. These advancements underscore Google's commitment to technological leadership in the AI and quantum computing space.
Google derives most of its revenue from advertising, and AI is essential for delivering relevant search results and content recommendations. Its AI-driven technologies help retain user interest and contribute to revenue growth. With Alphabet's net income reaching an impressive $94 billion in the trailing-12-month period, Google investors can expect years of solid returns, trading at 21 times next year's consensus earnings estimate.
- Given the anticipated expansion of the AI market, smart investors might consider channeling their finance into companies like Advanced Micro Devices (AMD), which has shown impressive growth in its GPU sales, particularly with the Instinct MI300 GPUs.
- Investing in AMD in 2023 could be a lucrative move, as the company continues to excel in its chip production and has a strong focus on research and development, aiming to capture a share of the $500 billion AI accelerator market by 2028.
- In the context of the AI market growth, businesses looking to allocate their financial resources effectively might want to consider Alphabet (Google), which has consistently delivered strong returns through its investments in AI and has a significant lead in the field of quantum computing with its Willow chip.
- By 2025, the AI market is projected to reach a staggering $826 billion, making it an attractive investment opportunity for individuals with an interest in technology and finance. Investors should closely monitor companies like AMD and Alphabet, which are positioned to capitalize on this growth, and consider incorporating these stocks into their portfolios.
