This could be one of the best times ever to invest in technology stocks, as we are entering a game-changing moment. The development of artificial intelligence (AI) is just beginning and this technology has the potential to revolutionize our daily lives and the number of businesses operating. The results can save time and money and even lead to major transformations, such as the discovery of life-saving medicines. Analysts predict that the AI ​​market, currently valued at around $200 billion, could exceed $1 trillion by the end of the decade.
So it’s a good time to invest $50,000 in a basket of AI stocks. (This should be part of a diversified strategy, so I would advise only investing this full amount in AI stocks if you have already built a solid portfolio that includes other sectors and stocks. Otherwise, consider investing a smaller portion , depending on your investment style, invest in the following stocks and the rest with quality players in other sectors.)
Most of the following AI powerhouses are already winning today – one is a recovery game – and they all have a lot more to win down the road. You could too, if you invest in it early.
1. Nvidia
Nvidia (NASDAQ: NVDA) may be the first stock many investors think of when someone mentions AI. That’s because the company dominates the AI ​​chip market, with an 80% share, and this has helped Nvidia boost profits by triple digits in recent quarters.
The share price followed suit, rising almost 200% over the past year, but there is still room for this player thanks to its commitment to innovation. Nvidia’s graphics processing units (GPUs) perform crucial AI tasks such as training and inferring models, and they are the fastest on the market. However, the company does not stand still and strives to update GPUs annually, so that Nvidia can stay far ahead of the competition in the long term.
The next catalyst for Nvidia is big: the launch of its Blackwell architecture and most powerful chip ever later this year. So it is a good time to enter this market giant.
2. Amazon
Amazon (NASDAQ: AMZN) benefits from AI in two ways. The e-commerce powerhouse uses AI to streamline and generally improve its operations, such as determining the fastest delivery routes for packages. This can reduce costs and increase revenue over time, and it can also keep customers coming back because they will appreciate the optimized services.
Amazon is also a leader in cloud computing, operating the Amazon Web Services (AWS) business, and here its AI investments are already paying off. AWS offers customers a variety of tools, from chips to a fully managed service with large language models that can be adapted to any AI project. And this has helped AWS recently reach $100 billion in annual revenue.
It’s important to remember that Amazon also has a long track record of profit growth and generates revenue and net income in the billions of dollars. So Amazon makes a solid buy because of its long-term strength and future AI potential.
3. Super microcomputer
Super microcomputer (NASDAQ: SMCI) has been around for about 30 years and had gradually growing turnover, but the company really took off thanks to the rise of AI. The company makes servers, workstations, and full rack-scale solutions needed in AI data centers. This has caused Super Micro’s profits to soar in recent years, and its stock price has followed suit.
This is why this should continue. Super Micro’s strategy of working hand-in-hand with the world’s best chipmakers allows it to immediately incorporate their chips into its products as soon as they hit the market. In addition, the company has a product line with many common parts, making the assembly of a custom product quickly possible.
This speed should keep Super Micro’s growth going – and the company’s liquid cooling technology is also shaping up to be a key growth driver. Heat generation in AI data centers is a huge problem, but Super Micro’s technology solves this perfectly.
All of this makes Super Micro an AI winner today, and this success should continue well into the future.
4. Intel
Intel (NASDAQ: INTC) fell behind in the AI ​​race in recent years, but the shares could now be making a tremendous recovery. Especially since the company has reached an important turning point. Intel recently launched a new portfolio of AI products that could help the company grab a decent share of this market – and demand is so high that there’s room for more than one chipmaker to excel.
The company launched the Gaudi 3 accelerator, an accelerator it claims could outperform Nvidia’s current GPU when it comes to inference and power efficiency – and at a lower cost.
Intel could also rise as it makes progress toward becoming the world’s second-largest foundry by 2030. The company has opened up its production network to others, meaning it will produce chips for these customers. This won’t result in profit growth overnight, but in the long run the results can be great. And that makes now a good time to bet on Intel’s future.
5. Broadcom
Broadcom (NASDAQ:AVGO) has been in the news lately for announcing a 10-for-1 stock split, scheduled for July. But that is not the reason to buy this semiconductor and networking giant. The reason to buy the stock has to do with the demand Broadcom is seeing from AI customers and growth from its recent acquisition of VMware. Broadcom reported a 43% increase in revenue last quarter to more than $12 billion, and these two elements drove the profit.
The company makes thousands of products that you can find everywhere, from your smartphone to a data center. This has helped Broadcom grow profits over time, but today’s high demand for AI could usher in a new era of growth.
In the quarter, AI revenues rose 280% to $3.1 billion, and Broadcom predicts AI revenues will exceed $11 billion this year. As Broadcom says, networking AI accelerators is difficult, but Broadcom has the technology to make it possible. So there is reason to be optimistic about growth as the AI ​​market develops. And that’s why Broadcom is a bargain before and after the upcoming stock split.
Should You Invest $1,000 in Nvidia Now?
Consider the following before buying shares in Nvidia:
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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. Adria Cimino has positions in Amazon. The Motley Fool has and recommends positions in Amazon and Nvidia. The Motley Fool recommends Broadcom and Intel and recommends the following options: long January 2025 $45 calls to Intel and short August 2024 $35 calls to Intel. The Motley Fool has a disclosure policy.
The Best Stocks to Invest $50,000 In Now was originally published by The Motley Fool
