The future is artificial intelligence (AI) and any industry you name has AI working for it. Whether it is the autonomous driving industry, gaming industry, tech industry or robotics industry, AI is everywhere. It is a revolution that is only getting started. Next-level technology, generative AI can be deployed in different use cases and it can benefit several businesses. With the AI hype, investors are scrambling to buy the must-own AI stocks that are in the best position to profit from the technology.
Several companies enjoy early-mover advantage and have started to take home big gains. While nobody knows for sure how far AI will reach, the opportunity is worth considering. Here are the three AI stocks for the future that every investor should own.
Oracle (ORCL)
One of the must-own AI stocks, Oracle (NYSE:ORCL) is shining strong right now. The company has become a leader in the space and is making big moves. Known for the enterprise resource planning software system, Oracle has a product that is already used by several manufacturing businesses. Over time, the company started expanding its cloud offering and offered an on-site and cloud data center infrastructure. The demand for cloud infrastructure has been on the rise and it has given Oracle a lot of space to grow. It has the best clientele in the industry and the cloud infrastructure segment has seen significant growth in recent quarters.
In the fourth quarter, the company impressed investors with solid financials. It reported an 18% rise in total revenue for FY 23 with $50 billion and the cloud infrastructure revenue saw a 76% rise year over year. The revenue hit an all-time high in the year and I think this is only the beginning. When one segment of the company is growing by more than 70%, it means that the company is doing something right. While it is not market-beating growth, the company has been around for quite some time to know how to get it right. For the first quarter of 2024, it expects the revenue to increase 8% to 10% year over year.
ORCL stock is exchanging hands at $120 today and is up 44% year to date. While it is very close to the 52-week high, I think it has the potential to hit a new high soon. Oracle has a strong history and impressive balance sheet and a few quarters of steady and consistent growth can help it reach new highs.
Advanced Micro Devices (AMD)
Chip maker Advanced Micro Devices (NASDAQ:AMD) is the biggest competitor of Nvidia (NASDAQ:NVDA). Known for the finest graphics processing units, AMD is a semiconductor company that recently launched a new chip, MI300X. It has an innovative approach and a strong reputation for delivering computing solutions that are the best in the industry. The AI race is just getting started and the providers of AI-based services will be making the most of this opportunity.
The company’s second-quarter results weren’t as anticipated by investors. It saw an 18% year-over-year drop in revenue to $5.4 billion. The adjusted earnings fell to $0.58 per share, down 45%. This could be due to the decline in the demand for PCs and several macroeconomic factors. However, it expects $5.7 billion in revenue this quarter and I believe it will be led by AI.
AMD shares rebound has been so impressive that the stock is up 65% year to date and has steadily grown after hitting rock bottom in October 2022. It is trading at $105 today and has grown over 300% in the past five years. Several investors have already written off AMD and believe that AI is already factored in its value but I believe there is a lot more to come. The way the semiconductor market is expected to grow, there will be a lot more clients and orders for AMD. This easily earns its spot on our list of must-own AI stocks.
Intel (INTC)
Another well-known player in the industry, Intel (NASDAQ:INTC) has also suffered due to the PC market’s downturn. It saw a 15% year-over-year drop in revenue which came down to $12.9 billion. Additionally, the adjusted earnings fell to $0.13, a 54% drop. The management expects a drop in revenue in the coming quarter as well. However, its Gaudi2 AI accelerator which is aimed at AI interfacing has caught the attention of many. The Gaudi2 AI accelerator already has an impressive customer base. Amazon Web Services is using it and the chip has become an ideal alternative for those who do not want to wait for long for Nvidia chips.
This will help build a steady revenue pipeline for Intel in the coming years. While Intel is still in the early stages of using AI, it has a strong clientele and a revenue pipeline that will gain momentum in the coming quarters. INTC stock is exchanging hands at $34 right now and looks fairly valued. It is up 28% year to date and now is a good chance to add it to your portfolio.
Intel expects the PC demand to rebound soon and it is also working on a semiconductor factory in Arizona to build chips. A lot is working in favor of Intel and you wouldn’t regret buying it. This and the other must-own AI stocks we mentioned are all worthy of your investment.
On the date of publication, Vandita Jadeja did not have (either directly or indirecItly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
