Investor interest in artificial intelligence (AI) has exploded over the past year, and for good reason: Companies that stand to gain the most from this groundbreaking technology are facing robust demand that could translate into attractive returns for shareholders.
The good news is that investors don't need to take risky bets to reap big rewards. Here are two of the world's most profitable companies that have the potential to deliver phenomenal returns for long-term investors.
1. NVIDIA
Investor interest NVIDIA (NASDAQ: NVDA) The company's stock price has risen dramatically in recent years, in tandem with market trends: Demand for the company's data center chips has driven its shares up 3,000% in the past five years.
Nvidia has long dominated the graphics processing unit (GPU) market, especially among gamers who buy its GeForce series of GPUs to play video games. But the company's GPU systems, designed for powerful data centers, have evolved into an incredible growth opportunity as data center operators snap up its powerful H100 enterprise chips needed for AI training.
Importantly, Nvidia shows no signs of losing steam or fading away. It's a highly profitable company; last year it made $30 billion in profits on revenue of $61 billion. Demand for the company's expensive data center chips continues to drive impressive bottom-line growth; in its most recent quarter, Nvidia reported a 628% increase in net income compared to the prior year.
It's also worth noting that Nvidia doesn't just offer GPUs. The company also sells the networking components and software solutions needed to build and operate data centers. Nvidia's networking revenue grew 242% year-over-year last quarter. This complete data center solution gives Nvidia an advantage over competitors offering AI-optimized chips.
Rising revenue from GPUs and other products points to widespread demand for AI infrastructure. Nvidia will continue to benefit from an initial uptick in corporate investment in AI infrastructure, but as AI models get smarter and more complex in the coming decades, Nvidia should be able to realize sustainable growth from continued upgrades to hardware and other datacenter components.
2. Microsoft
Nvidia is the face of AI on the hardware side, but Microsoft (Nasdaq: MSFT) The company plays its role on the software side. Though not many realized the significance at the time, in retrospect, Microsoft's investment in ChatGPT owner OpenAI in 2019 was one of the most important strategic partnerships in the history of technology. The company's stock has tripled over the past five years and is well positioned for further gains.
The deal with OpenAI allows Microsoft to offer AI services to cloud customers in Microsoft Azure, while also spearheading the rollout of its Copilot generative AI assistant on Windows. Microsoft has multiple ways to make money from AI, from subscription services in Microsoft 365 to enterprise services in Azure.
Copilot is already available on about 225 million Windows PCs, allowing Microsoft to grow revenue from monthly subscriptions to use the AI assistant in Word, Excel and other apps. Copilot will help drive long-term growth for those Office apps, especially on the business side, where Office 365 commercial revenue grew 15% year over year last quarter.
But the cloud-computing opportunity remains alive for the software giant: Azure and other cloud services posted 31% year-over-year revenue growth last quarter, with 7% of that driven by demand for AI.
Microsoft is also gaining share in online searches with the introduction of AI search features in its Bing and Edge web browsers, and the company's search and news ad revenue beat management expectations last quarter, giving it another channel to monetize AI.
Microsoft's recurring revenue stream from its various software services makes it a relatively safe choice for investing in AI: The company's net profits last year were $86 billion, more than doubling over the past five years, and are likely to continue to grow.
Should I invest $1,000 in Nvidia right now?
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John Ballard invests in Nvidia. The Motley Fool invests in and recommends Microsoft and Nvidia. The Motley Fool recommends buying Microsoft January 2026 $395 calls and selling Microsoft January 2026 $405 calls. The Motley Fool has a disclosure policy.
“2 Top Artificial Intelligence Stocks to Buy Now” was originally published by The Motley Fool.
