The artificial intelligence (AI) market has grown tremendously since early 2023. The debut of OpenAI’s ChatGPT illustrated important developments in generative AI technology and demonstrated its potential to change all aspects of technology.
As a result, a slew of companies have ventured into the AI ​​space, trying to grab a piece of the pie that was worth nearly $200 billion last year, and Grand View Research predicts it will grow at a compound annual rate through 2030 of 37% growth. And while many affected stocks have already experienced a meteoric rise, the potential of AI suggests it’s not too late to invest in the trend and reap big profits in the long term.
Tech giants have barely scratched the surface of what’s possible with AI, suggesting now could be the best time to invest in the companies driving the industry forward. So here are two artificial intelligence stocks that could go parabolic.
1. Intel
You might be surprised if I recommend it Intel (NASDAQ: INTC), as shares are down 39% year to date. However, the company appears to be making a comeback that could send its stock price soaring in the coming years.
After a challenging decade, Intel is restructuring its operations to regain its competitive advantage. The company is investing heavily in AI and is introducing a range of new AI processors this year. Meanwhile, the chip giant is expanding its manufacturing division, a move it says will help it achieve non-GAAP gross margins of 60% and save between $8 billion and $10 billion by 2025.
Restructuring is expensive and it will take some time before Intel sees a significant return on its investment. However, recent results indicate that the company is on the right track. In the first quarter, revenue rose 9% year over year to $13 billion – a sharp contrast to the 16% revenue decline it posted in 2023. The chipmaker also delivered non-GAAP earnings of $0.18 per share, which beat expectations by about. $0.04 per share.
Intel still has a lot of work to do in the fight against the competition Nvidia in the AI ​​chip market and is expanding its foundry division. However, it is on a promising growth trajectory. In addition to positive earnings, the company’s trailing-twelve-month free cash flow has increased by about $2 billion since January.
Trading at a price-to-earnings ratio of around 28 and a share price near multi-month lows, Intel is a screaming buy this month.
2. Apple
Apple‘S (NASDAQ: AAPL) The stock price has risen more than 10% since last month as Wall Street became bullish on the company again. The iPhone maker has hit a number of speed bumps in the past year as declining product sales led to revenue declines. However, recent developments gave investors a glimpse into Apple’s plan to increase product revenue using AI.
On June 10, the company unveiled Apple Intelligence, a platform that will bring generative AI features to its devices. The catch, however, is that to take advantage of this, users will need at least an iPhone 15 Pro, or a Mac or iPad equipped with an M1 to M4 processor. This move could prompt millions of consumers to upgrade to the company’s latest devices.
Despite recent challenges, Apple remains a consumer technology behemoth. The company has built nearly unparalleled brand loyalty within its user base, which could make it a major growth driver in public AI adoption. While companies like it Microsoft And Amazon should prioritize meeting the AI ​​needs of the business community, Apple’s focus on consumers could see Apple dominate that part of the AI ​​space.
In addition to its products, Apple has a thriving services sector that could also be strengthened by AI. The company has partnered with OpenAI, where Siri directs users to ChatGPT for answers to specific questions. However, this appears to be just the beginning. In time, OpenAI’s technology could help Apple offer a range of paid AI services to improve the usability of its products.
Additionally, Apple’s stock is trading at a buy/earn level compared to some of its AI rivals. The company’s gradual expansion into AI has led to a more moderate rise in stock prices than Microsoft and Amazon have seen in the past year. Still, the iPhone maker is far outperforming both in terms of free cash flow, indicating it could be better equipped to continue investing in its business.
As a result, Apple is a no-brainer at this point.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, 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 holds positions in and recommends Amazon, Apple and Microsoft. The Motley Fool recommends Intel and recommends the following options: long January 2025 calls of $45 on Intel, long January 2026 calls of $395 on Microsoft, short August 2024 calls of $35 on Intel, and short calls in January 2026 from $405 on Microsoft. The Motley Fool has a disclosure policy.
2 Artificial Intelligence (AI) Stocks That Could Go Parabolic was originally published by The Motley Fool
