If you follow tech or stock market news even slightly, you're probably growing tired of reading about artificial intelligence (AI). The technology has been featured in countless headlines since the start of 2023, after the launch of OpenAI's ChatGPT. The advanced chatbot reignited interest in AI, highlighted its potential to improve many industries, and motivated companies across tech to pivot their business toward the budding market.
However, whether you've come down with AI fatigue or not, it remains hard to deny the potentially lucrative opportunity that investing in AI presents. Despite massive investment over the last year, the market is still in its infancy. The generative technology is being applied to many industries, such as healthcare, education, consumer tech, cloud computing, productivity software, and much more. In all likelihood, the best use of AI hasn't even been thought of yet.
Consequently, AI likely still has plenty to offer companies and new investors. So, here are two artificial intelligence stocks that could help make you a fortune.
1. Advanced Micro Devices
Despite years of success in the chip market, the boom in AI seemed to catch Advanced Micro Devices (NASDAQ: AMD) off guard. Last year, a surge in demand for AI models triggered a similar increase in demand for graphics processing units (GPUs), the high-performance chips that make AI possible.
AMD is no stranger to the GPU industry, holding the second-largest market share (after Nvidia ) in desktop GPUs for years. Yet, Nvidia managed to get a head start by immediately supplying its GPUs to AI developers in 2023, while AMD took time to catch up.
For years, AMD's primary focus has been central processing units (CPUs), where the company has achieved record heights. AMD has consistently stolen CPU market share from Intel since 2017, with its share rising from 20% to 34%.
Meanwhile, AMD's business has proven far more efficient than Intel's. Intel boasts a 76% market share in data center CPUs, which saw it earn $3 billion in the second quarter of 2024. Yet, AMD achieved $2.8 billion from its server CPU business in the same period, with only 24% of the market.
And now AMD is making promising headway in AI GPUs. In 2024, the company launched new GPUs to better compete with Nvidia, welcoming Microsoft 's Azure, Meta Platforms , and Oracle as customers. The AI expansion is already paying off, with AMD's data center segment posting a 115% rise in revenue in Q2 2024, a record for the chipmaker.
AMD's stock is up more than 376% in the last five years but could rise much higher over the next half-decade thanks to AI. The company's forward price-to-earnings (P/E) ratio is high at 44. However, that figure is also below its 12-month average for the metric. Given its significant potential in AI, AMD is worth considering right now.
2. Apple
Apple (NASDAQ: AAPL) has taken a more reserved approach to AI than many of its peers. As companies like Microsoft and Alphabet pushed full force into the industry in 2023, Apple is only now gearing up to launch its most significant AI product yet. However, its potent brand and vast cash reserves could allow it to quickly gain a powerful role in the industry.
This fall, the tech giant will debut Apple Intelligence, its name for a wave of AI updates to its product lineup. The software overhaul will bring language, image, and audio generation features to its iPhones, Macs, and iPads. Apple Intelligence's release will follow the launch of the iPhone 16 in September, the company's first smartphone designed with AI in mind.
Apple has made Apple Intelligence only available to its newer and more powerful devices. As a result, iPhone users will need an iPhone 15 Pro or higher to access the new AI features. Meanwhile, Macs and iPads will require M1 through M4 chips.
Apple has experienced repeated declines in its product segments over the last year amid general weak consumer spending power and decreased market share in crucial markets like China. However, earnings results for the fiscal third quarter of 2024, ended June 29, suggest new AI-focused product releases could work to bolster sales.
Revenue increased 5% year over year during the quarter. The period was boosted by a 24% rise in iPad sales thanks to the launch of new iPad Air and Pro models in May, the first new iPad releases since 2022. As a result, a similar revamp to its other products could further boost sales in the coming months, especially with AI as a factor.
Competitors like Microsoft, Amazon , and Alphabet have mainly focused on the business side of AI. However, Apple's priority of getting AI into the hands of consumers could go a long way in securing a powerful position in the industry.
Apple's forward P/E is high at 34. However, with $104 billion in free cash flow and a potent brand, Apple's stock remains an attractive way to invest in AI and one that could make you a fortune.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Oracle. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short August 2024 $35 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy .
Most Popular
Comments / 0