Artificial Intelligence (AI) is more than just a trend, it is transforming many businesses. This will increase efficiency and create new growth opportunities in the future. According to data from Grand View Research, the global AI market is projected to grow at a compound annual growth rate of nearly 38% through 2030.
Three companies that could benefit from this long-term growth opportunity are: C3.ai (AI -1.69%), Nvidia (NVDA -1.06%)and alphabet (GOOG 4.12%) (Google 4.31%). Here’s why these stocks could be big long-term buys as AI becomes more prevalent in everyday business.
1.C3.ai
C3.ai is a pure AI stock that has been hot this year and is up over 70% in 2023. Its enterprise solutions offer the potential to help companies in many industries, including manufacturing, oil and gas, utilities and power companies. others. Its applications work to improve uptime, improve supply he chain efficiency, and aid in fleet management and customer service. The growth opportunities the company is trying to seize in the AI space are no doubt why many investors are bullish on C3.ai stock. Right now, however, that bullish stance is countered by some overwhelming financial conditions.
Investors buying into this stock should understand that it may take some time for C3.ai’s business to grow significantly and become profitable. For fiscal 2023 (ending April 30), C3.ai management expects annual revenue to be $265 million. That’s only a 5% increase from the numbers we reported for fiscal 2022. Meanwhile, management expects an adjusted operating loss for the fiscal year of approximately $71 million.
C3.ai has many well-known customers and opportunities to grow and expand its business while strengthening its profile within various industries. In partnership with the U.S. Department of Defense, Raytheon Technologieshas strong relationships with oil and gas companies. baker fuse likewise.
C3.ai has a market cap of about $2.2 billion. If the company continues to grow its customer base and improve its sales and earnings, the stock could be a buy in the long term. There’s some risk here given the company’s ongoing losses and relative volatility, but with potentially significant upside, this is definitely worth watching and adding to the portfolio. AI stocks that may be
2. Nvidia
A slowdown in PC demand has hit Nvidia’s sales in recent quarters, but that trend is unlikely to continue in the long term. Meanwhile, the company’s A100 graphics chip is integral to the development of ChatGPT.
Given the growing excitement around AI, Nvidia is focusing more resources on that area of its business. The company has launched a cloud-based service that allows companies to “build, refine, and operate custom large-scale language and generative AI models trained on their own data and created for their own domain-specific tasks. “It’s going to help.”
Nvidia already has a great track record. With the inevitable recovery of the PC market and the opportunity for companies to help develop his AI capabilities, Nvidia is also one of the stocks that will see big gains over the next few years.
One of the real issues is that investors are already aware of Nvidia’s potential, and the company’s stock is trading at or near a 52-week high, with the stock doubling since the beginning of the year, and the share price has fallen. Earnings ratio (PER) multiple is about 170. Much of the expected growth appears to be already priced into the stock. However, given the possibilities of AI, not yet It may never be too late to invest in Nvidia. With free cash flow of at least $3 billion each over the last four years, the company has ample resources to invest in exciting growth opportunities.
3. Alphabet
Alphabet is working on a ChatGPT competitor, Bard. While it didn’t get off to a good start, the technology development that could revolutionize the Google search engine is still in its early stages.
Google announced several AI-related initiatives at its developer conference this week, including embedding AI into popular office apps like Gmail, Sheets, Slides and Docs. The company also plans to bring AI to its search engine.The move will intensify competition microsoft‘s Bing browser also gets an AI-related upgrade.
Alphabet’s stock is up just 32% this year, making it the most conservative AI stock on this list. The company’s valuation of 23 times multiples is a bargain when you consider that the average tech stock trades at 30 times. That’s not bad for a tech company that does YouTube as well as Google search.
Alphabet, which has been struggling with weak demand in the advertising market, recently posted better-than-expected first-quarter results. Revenue was just under $70 billion, up 3% from a year earlier, and earnings per share were $1.17, beating analyst expectations. $1.07. The company’s decision to buy back $70 billion worth of stock could also prove to be an act of genius given its modest valuation, and it will buy back shares for greater returns in the long run. It may help to set.
Alphabet may have gotten off to a rough start in the AI search engine wars, but investors shouldn’t consider this stock because it could pay off big for investors in the years to come.
Alphabet executive Suzanne Fry is a member of the Motley Fool’s board of directors. David Jagielski has no positions in any of the mentioned stocks. The Motley Fool has positions with and endorses Alphabet, Microsoft and Nvidia. The Motley Fool recommends C3.ai and Raytheon Technologies. The Motley Fool has a disclosure policy.
