Long-term investing is not about thinking about weeks, months, or even next year. It's about thinking about businesses that could shape the world in years to come. decades, To the future. Artificial intelligence (AI) is here. Perhaps the world has not yet sniffed the long-term potential of AI.
So when you think about which companies today are poised to make the biggest changes in the future, a few winners come to mind. Arm Holdings (NASDAQ:ARM), tesla (NASDAQ:TSLA)and meta platform (NASDAQ:Meta).
Each is already at the top of their respective industries and can push AI to new heights. In the long term, massive growth opportunities can reward shareholders for decades.
The best part? You can become a shareholder in each company for just $715 total.
The investment pitch for each is as follows:
Arm Holdings collects royalties on half of the world's chips
Arm Holdings is an outlier in the semiconductor space.The company designs blueprints that companies prefer. apple, AMD, Nvidia, QualcommSome people are using it to design processor chips for applications such as . Arm-based chips are used in smartphones, cars, appliances, factories, and more around the world. Arm's designs power about half of the world's processor chips.
The company makes money from royalties and license fees, making it a highly profitable business with research and development as its main expense. The gross profit margin for this business is a whopping 97%. Arm's $2.9 billion in revenue over the past year generated $762 million in free cash flow. This profit can be spent by the ARM at its discretion or transferred to its balance sheet as cash. The company currently has $2.4 billion in cash and no debt.
Long-term investors will be pleased with Arm's strong financials and future growth opportunities. AI, autonomous driving, cloud computing, and consumers in developing markets starting to use smartphones and other modern luxuries should all drive demand for chips. Given its huge market share, there's no doubt that Arm will thrive on these tailwinds. That makes this stock a long-term winner that investors can buy and hold with confidence.
Tesla will invest $10 billion in self-driving AI this year
Tesla stock has fallen from previous highs as Wall Street debates whether this is a car company or something more. CEO Elon Musk is betting big on the latter. He recently announced that Tesla will invest $10 billion this year to build out Tesla's AI capabilities, with a primary focus on fully self-driving technology (FSD). Self-driving has long been an ambition of Tesla, and version 12 of the software appears to represent a breakthrough with the advancements in his AI that Tesla has implemented.
The potential market for FSD is huge. Robotaxis are still a nascent market today, but Fortune Business Insights estimates that they represent a $118 billion market opportunity by 2031. Elon Musk has even publicly stated that Tesla's long-term value will depend heavily on the company's success in self-driving.
Investors should keep an eye on FSD, but there's more to Tesla than Elon revealed. Tesla is a leader in electric vehicle (EV) technology and has a growing energy business with long-term potential due to its benefits. As these irons mature over the next few years, it's hard not to see Tesla grow.
AI could take meta monetization to the next level
Meta Platforms is not a story full of many “what ifs” about its future. Today, meta is already a dominant business. The company's social media apps include Facebook, Instagram, Threads, and WhatsApp. 3 billion Daily active users. Making money for the company is as easy as selling ads to the billions of people who scan their app's home screens every day.
It's a lucrative business that generates $50 billion in free cash flow and $142 billion in annual revenue. For companies, that means spending a lot of cash. Meta inflated its balance sheet and amassed $32 billion in cash. The company recently started paying a dividend and is known for large-scale share buybacks that lead to higher earnings per share (EPS) and stock price. The world's population is growing and Meta is still increasing its active users.
AI helps advertisers optimize advertising campaigns on Meta's apps, and Meta has started deploying AI models to improve user experience on its apps. Don't forget the meta wildcard in Reality Lab. Meta is betting tens of billions of dollars on developing cutting-edge AI technology that CEO Mark Zuckerberg can deploy in a variety of ways. Investing in the long-term potential of AI, it's hard to leave Meta Platform off your list.
Should you invest $1,000 in Arm Holdings right now?
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Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool's board of directors. Justin Pope has no position in any stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Meta Platforms, Nvidia, Qualcomm, and Tesla. The Motley Fool has a disclosure policy.
“3 Artificial Intelligence (AI) Stocks to Buy for $715 and Hold for Decades” was originally published by The Motley Fool.