Artificial intelligence (AI) has become the hottest investment topic thanks to the technology's potential to improve everything from people's daily lives to the way they do business. This can be applied to all sectors, allowing car manufacturers to increase the efficiency of their factories and pharmaceutical companies to develop medicines faster, to name just a few. The great thing about AI is that the companies that develop it and the companies that use it both This provides many opportunities for investors to share in the wins as well.
You don't need to invest a lot of money to bet on these exciting players. Below, I discuss three of my favorite AI stocks to buy and hold for the long term. You can also buy for less than $25 per share. But if you happen to have $1,000 to invest, you can participate in all three and earn your spot among the most promising companies in the industry.
1. Super microcomputer
super microcomputer (NASDAQ:SMCI), or Supermicro, has soared more than 750% in the past year thanks to its key role in AI. The company is a one-stop shop for servers, storage systems, full rack scale solutions, and more. Products that accelerate AI projects are in high demand these days.
In its latest quarter, Supermicro reported record demand for rack-scale AI systems powered by chips from leaders such as: Nvidia and Advanced Micro Devices. This boosted the server giant's revenue by 103% to more than $3.6 billion.
Supermicro is distinguished by its ability to bring new products to market quickly and its focus on customizing solutions for its customers. To speed time to market, Supermicro follows technology developments from Nvidia, AMD, and others, allowing them to instantly integrate them into its products.
This means that when such a player releases a new chip, it is likely to be available on Supermicro's systems immediately. Customers also like Supermicro because they can choose a variety of processors, memory, and other elements for their servers depending on their specific needs.
Finally, AI clients are flocking to Supermicro for innovations in liquid cooling systems, knowing that compute-intensive technologies generate a lot of heat. This could potentially save customers long-term costs.
Supermicro is currently trading at 36 times forward earnings, which seems reasonable for a company with a strong competitive advantage serving a high-growth industry.
2. Amazon
Amazon (NASDAQ:AMZN) It exists in almost every area of ​​AI. The company has benefited and should continue to benefit from the use of technology across its e-commerce operations. The e-commerce leader is making many important improvements, including increasing efficiency across its fulfillment network and helping customers find what they're looking for by providing suggestions based on previous purchases. We use AI for many functions.
Amazon could also be an AI winner thanks to its services that help cloud computing customers apply AI to their businesses.
Amazon Web Services (AWS) is tackling AI from every angle. We've developed a chip for clients who want to train their own large-scale language models (LLMs). For clients who don't want to go through the hassle of building one from scratch, AWS has another option. Amazon Bedrock is a fully managed service that allows clients to choose from and customize a variety of top LLMs. Finally, AWS recently introduced Amazon Q, a generative AI assistant that also exists at the application level and helps clients perform various tasks.
Amazon currently trades at 39 times expected earnings, down from 56 times at the end of last year. This presents investors with a great opportunity to tap into this potential AI giant.
3. Palantir Technologies
Palantir Technologies (NYSE:PLTR) is the stock I mentioned earlier whose stock price is less than $25 per share. Even though it trades at a much higher multiple than the companies mentioned above (about 72 times forward earnings estimates), it's still on my buy list. That's because this valuation metric doesn't take into account future growth potential.
It looks like Palantir is just getting started. Analysts predict that this exciting Software-as-a-Service company will grow 85% annually over the next five years.
Palantir helps customers aggregate and analyze vast amounts of data and draw conclusions that are highly valuable to their operations. The company has long relied on revenue from government contracts, but that is changing last year with the launch of its artificial intelligence platform (AIP) and a “boot camp” to introduce the service to customers.
Commercial revenue now represents a significant growth opportunity as companies sign on to AIP and leverage Palantir's AI strengths to leverage their data. Recent quarterly results demonstrate that potential.
In the most recent quarter, U.S. commercial revenue increased 70% year-over-year to $131 million, and the number of U.S. commercial customers increased 55%. In the quarter, Palantir closed his 103 deals, which exceeded his $1 million mark, double his number from the same period last year.
Palantir CEO Alex Karp has predicted that AIP will be “the future of our company,” and the company's momentum suggests he may be right. That's why Palantir has the potential to become one of the industry's big winners, making it a top AI stock to buy today and hold for the long term.
Should you invest $1,000 in a super micro computer right now?
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John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool's board of directors. Adria Cimino has a position at his Amazon. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Nvidia, and Palantir Technologies. The Motley Fool recommends Super Micro Computers. The Motley Fool has a disclosure policy.
“3 Top Artificial Intelligence Stocks to Buy for $1,000 and Hold for the Long Term” was originally published by The Motley Fool.