This article originally appeared on our US website and was written by Dani Cook.
The artificial intelligence (AI) market has been booming since the start of 2023. The debut of OpenAI's ChatGPT marked a significant advancement in generative AI technology, demonstrating its potential to transform every aspect of technology.
As a result, many companies are jumping into the AI space, hoping to grab a piece of the market, which was worth nearly $200 billion last year. Grand View Research predicts that the market will grow at an annual rate of 37% through 2030. And while many related stocks have already skyrocketed, AI's potential means it's not too late to capitalize on this trend and reap big long-term rewards.
Tech giants are only just scratching the surface of AI's potential, which means now could be the perfect time to invest in the companies that are driving the industry forward. Here are two artificial intelligence stocks that could soar.
1. Intel
You might be surprised to see what I recommend Intel (Nasdaq: INTC)The company's shares are down 39% so far this year, but it appears to be on the cusp of a resurgence that could send the stock soaring in the coming years.
Intel is restructuring to regain its competitive edge after a tough decade. The company is investing heavily in AI and is launching a series of new AI processors this year. Meanwhile, the chip giant is expanding its manufacturing operations, which it believes will help it achieve non-GAAP gross margins of 60% and cut costs by $8 billion to $10 billion by 2025.
The restructuring will be costly, and it will take time for Intel to realize significant benefits from its investment. But recent results suggest the company is moving in the right direction. First-quarter sales increased 9% year over year to $13 billion, contrasting with a 16% decline in sales in 2023. The company also achieved non-GAAP earnings per share of $0.18, beating expectations by about $0.04 per share.
Intel faces many challenges ahead. NVIDIA The company is entering the AI chip market and expanding its foundry division, but it's on a promising growth trajectory: In addition to positive revenue, the company's trailing-12-month free cash flow has increased by about $2 billion since January.
With its forward price-to-earnings ratio of about 28 and its stock price near its lowest levels in recent months, Intel is a good time to buy this month.
2. Apple
appleof (Nasdaq: AAPL) The stock has risen more than 10% since last month as Wall Street has once again turned bullish on the company. The iPhone maker has faced some obstacles over the past year, including declining product sales that led to declining revenue. But recent developments have given investors a glimpse into Apple's plans to boost product revenue with the help of AI.
On June 10, the company unveiled Apple Intelligence, a platform that brings generative AI capabilities to its devices. But to get the feature, you'll need at least an iPhone 15 Pro, or a Mac or iPad with an M1-M4 processor — a move that could entice millions of consumers to upgrade to the company's latest devices.
Despite recent challenges, Apple remains a consumer technology giant that has built nearly unparalleled brand loyalty among its user base and could be a major growth driver in the mass adoption of AI. Microsoft and Amazon While Apple is prioritizing serving the AI needs of businesses, its focus on consumers may give it an edge in that part of the AI space.
In addition to its own products, Apple is also rapidly growing its services business, which may be enhanced by AI. The company has partnered with OpenAI to allow Siri to hand over answers to certain questions to ChatGPT. However, this seems to be just the beginning. In the future, OpenAI's technology may enable Apple to offer a variety of paid AI services to improve the usability of its products.
Data by YCharts.
Moreover, Apple's stock is trading at a cheaper forward P/E level compared to some of its AI peers. The company's incremental expansion into AI has been slower than the stock gains of Microsoft and Amazon over the past year. But the iPhone maker is far ahead of both in free cash flow, suggesting it may be well-positioned to continue investing in the business.
As a result, Apple is the obvious choice for now.
