Artificial intelligence (AI) is rapidly transforming industries around the globe, and its potential impact on the global economy will be nothing short of revolutionary. While investors have already seen impressive returns from the sector, the best AI stocks to buy are just getting started.
AI will continue to drive change and enhance efficiency, decision-making and productivity. From LLMs, machine learning algorithms and autonomous systems, businesses across all sectors will have no choice but to implement these technologies. The companies that possess unparalleled resources, robust AI research and the scale to integrate and bring AI products and services to market fast will be the long-term winners. That presents a compelling investment opportunity and provides a runway for investors to capitalize on the potential for exponential growth in the coming decade.
Now, let’s unpack the three best AI stocks to buy that could go parabolic in the next decade!
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) has been aggressively investing in AI for years, recognizing the transformative potential it holds. Its cloud computing platform, Azure, provides a robust foundation for building and deploying AI solutions for businesses across all sectors.
Microsoft is having a stellar year as the company focuses on Azure cloud deployment and integrating AI across its entire tech stack. The deep integration of AI into its business offerings, like Office 365, is a game-changer. Moreover, its AI-powered copilot software will boost productivity for its customers. While some analysts have forecasted the revenue growth potential of this offering, it is safe to say that they’re being conservative. Furthermore, their partnership with OpenAI, the creator of ChatGPT’s LLM, is a considerable value add.
In its latest quarterly results, MSFT delivered another strong quarter of sequential growth. Revenue swelled 17% year-over-year (YOY) to $61.9 billion, with operating income up 23% to $27.6 billion. Cloud strength was a primary growth driver, with cloud revenue up 23% YOY to $35.1 billion. With businesses embracing the new era of AI, MSFT stock remains one of the top AI stocks to buy in 2024 and beyond.
Amazon (AMZN)
Amazon’s (NASDAQ:AMZN) stock dominance in e-commerce and cloud computing is apparent. However, its leadership in AI runs deep as the company ramps up its diverse product offerings in 2024.
The company is in transition mode in 2024, and all of its efforts last year are working according to plan. Cost-cutting efforts, as well as key investments into AI, are paying significant dividends so far. Demand for Amazon Web Services (AWS) is unprecedented, as the appeal of its AI tools accelerates growth. The company recently reported its Q1 FY24 results, showcasing some shocking results. While forecasts estimated operating income to double in the first quarter, it more than tripled to $15.3 billion.
Moreover, FCF skyrocketed to $50.1 billion, compared to an outflow of $3.3 billion in Q1 2023. Amazon’s cloud business is at a $100 billion annual run rate in 2024 as growth reaccelerates across all business segments. That makes Amazon one of the best AI stocks to buy on the dip for exceptional long-term growth.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), the parent company of Google, is a pioneer in AI. Its core product offering, Google Search, gives it a unique competitive advantage in the marketplace.
The company is undoubtedly one of the leaders in the AI race. Beyond Google Search, Alphabet is using AI to enhance nearly every aspect of its business. That is contributing to double-digit growth at both Google Search and YouTube. Additionally, Google’s Gemini LLM continues to gain traction, boasting superior metrics when matched up to ChatGPT’s model. The model outperforms on multiple benchmarks, including general, reasoning, math and code generation.
In the first quarter of 2024, Alphabet reported strong growth and remains confident in its position to lead the next wave of AI innovation. Revenue increased 15% YOY to $80.5 billion, with operating income up 32% to $25.47 billion. The company’s cloud business is growing rapidly, and momentum is set to continue in the 2024 fiscal year.
On the date of publication, Terel Miles did not hold (either directly or indirectly) 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.
