Most people facing a big decision want to know their options first. But when there are many options, the decision-making process can still be overwhelming.
I suspect some investors may feel this way when choosing artificial intelligence (AI) stocks. While there are many good alternatives, I think a few rise to the top. Here are three great AI stocks to buy in June.
1. Nvidia
The adjective “magnificent” certainly applies to Nvidia (NASDAQ: NVDA). Shares of the maker of graphics processing units (GPUs) have skyrocketed about 180% in the past twelve months and have delivered a stunning gain of over 24x over the past decade. Nvidia is by far the fastest rising member of the so-called “Magnificent Seven” stocks.
However, what Nvidia has done in the past is not as important as what it could do in the future. The company’s astonishing growth story won’t end anytime soon. Technology companies continue to buy Nvidia’s AI chips as quickly as they can get their hands on them.
Nvidia plans to launch its new Blackwell GPU platform later this year. Blackwell will be the most powerful AI architecture ever. It is not surprising that demand for Blackwell is already exceeding expected supply.
Yes, Nvidia is trading at a price-to-earnings ratio of almost 65. I’ve sometimes been leery of the stock’s valuation, but growth puts high earnings multiples in a different context. And Nvidia is poised to continue delivering stunningly strong growth.
2. Amazon
Amazon (NASDAQ: AMZN) is another Magnificent Seven stock that has been a big winner, thanks in part to its AI initiatives. Shares are up about 45% in the past 12 months, and Amazon has also boomed in the past decade.
I expect Amazon Web Services (AWS) to be one of the biggest beneficiaries of the generative AI explosion. It is already the largest provider of cloud services. In my opinion, AWS’s approach to making multiple large language models (LLMs) and AI tools available to its customers is a smart strategy. While AWS is a big customer for Nvidia (and will be one of the first to get Blackwell), the cloud unit also offers its own custom, cost-effective AI chips for training and inference.
Don’t forget Amazon’s ability to use AI internally. The company is very focused on increasing profitability, as evidenced by 225% year-over-year profit increases in the first quarter. CFO Brian Olsavsky said in Amazon’s April earnings call that it is investing in technologies, including automation and robotics, to further reduce costs.
However, AI isn’t the only reason to buy Amazon stock. Amazon has multiple growth drivers, including advertising, expansion into healthcare and the upcoming Kuiper satellite internet service.
3. Metaplatforms
Metaplatforms (NASDAQ: META) is the smallest company of these three (and the second smallest of the Magnificent Seven) with a market cap of “only” about $1.17 trillion. However, Meta has been a monster stock over the past twelve months, with gains of over 75%.
I especially like Meta for its appreciation. The stock’s price-to-earnings-growth (PEG) ratio is 1.08, lower than all other Magnificent Seven members. But can Meta deliver on the growth projections baked into that metric? I think so.
The company has great potential to use AI to increase revenue from its video and messaging features, including Reels and WhatsApp. The company is also working hard to engage users to increase the value of the platform for advertisers.
CEO Mark Zuckerberg believes it’s “quite possible that smart glasses with built-in AI assistants will be the killer app.” He thinks AI-powered business messaging will be “the next major pillar” of Meta’s business. Zuckerberg is also committed to the development of artificial general intelligence (AGI). However, Meta doesn’t have to succeed on all fronts to deliver exceptional long-term returns for investors.
Should You Invest $1,000 in Nvidia Now?
Consider the following before buying shares in Nvidia:
The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.
Think about when Nvidia created this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $671,728!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates, and two new stock picks per month. The Stock Advisor is on duty more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns May 28, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Amazon and Meta Platforms. The Motley Fool holds positions in and recommends Amazon, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
3 Great Artificial Intelligence (AI) Stocks to Buy in June was originally published by The Motley Fool
