When faced with a big decision, most people want to know their options first, but with so many options the decision-making process can still feel overwhelming.
I imagine some investors are feeling this way when choosing which artificial intelligence (AI) stocks to buy. There are a lot of great options, but I think there are a few stocks that will rise to the top. Here are three great AI stocks to buy in June.
1. NVIDIA
“Amazing” is definitely the adjective NVIDIA (NASDAQ: NVDA)Shares of graphics processing unit (GPU) makers have soared about 180% over the past 12 months and recorded a staggering increase of more than 24 times over the past decade, with Nvidia being by far the fastest-growing of the so-called “Magnificent Seven” stocks.
But what Nvidia has done in the past is less important than what it can do in the future. The company's incredible growth story isn't likely to end anytime soon. Tech companies continue to buy up Nvidia's AI chips as soon as they become available.
Nvidia is set to release its new Blackwell GPU platform later this year. Blackwell will be its most powerful AI architecture to date. Not surprisingly, demand for Blackwell is already outstripping expected supply.
Indeed, NVIDIA trades at a very high price-to-earnings multiple of nearly 65. I've felt uneasy about the stock's valuation at times, but growth puts high earnings multiples in a different context, and NVIDIA is likely to continue to post surprisingly strong growth going forward.
2. Amazon
Amazon (Nasdaq: AMZN) is another of the Magnificent Seven that has seen huge success thanks in part to its AI initiatives. Its shares have risen about 45% over the past 12 months, while Amazon has seen its stock price increase 11-fold over the past decade.
I expect Amazon Web Services (AWS) to be one of the biggest beneficiaries of the explosion in generative AI. The company is already the largest cloud service provider. In my view, AWS' approach of providing multiple large-scale language models (LLMs) and AI tools to its customers is a smart strategy. AWS is a major Nvidia customer (it will be one of the first to get Blackwell), and the cloud division also provides its own custom, cost-effective AI chips for training and inference.
The opportunity for Amazon to leverage AI internally is not to be overlooked. The company is focused on improving profitability, as evidenced by its 225% year-over-year increase in first-quarter revenue. Chief Financial Officer Brian Olsavsky said during Amazon's April earnings call that the company is investing in technologies like automation and robotics to further reduce costs.
But AI isn't the only reason to buy Amazon stock: Amazon has multiple growth drivers, including advertising, expansion into healthcare, and its upcoming Kuiper satellite internet service.
3. Meta Platform
Meta Platform (Nasdaq: META) is the smallest of these three (and the second smallest of the Magnificent Seven), with a market cap of “only” about $1.17 trillion, but Meta has risen over 75% over the past 12 months, making it a monster stock.
I like Meta mainly because of its valuation. The company's price-to-earnings-growth (PEG) ratio of 1.08 is lower than all of the other companies in the Magnificent Seven. But can Meta deliver on the growth projections priced into this metric? I think so.
The company sees a big opportunity to leverage AI to better monetize its video and messaging features like Reels and WhatsApp, and is also focusing on user engagement to make the platform more valuable to advertisers.
CEO Mark Zuckerberg believes “smart glasses with a built-in AI assistant could very well be the killer app.” He thinks AI-powered business messaging will be the “next big thing” for Meta. Zuckerberg is also pushing to develop artificial general intelligence (AGI). But Meta doesn't need to be successful on all fronts to deliver superior long-term returns for investors.
Should I invest $1,000 in Nvidia right now?
Before you buy Nvidia stock, consider the following:
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Things to consider NVIDIA This list was created on April 15, 2005…If you invested $1,000 at the time of recommendation, That comes to $671,728.!*
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John Mackey, former CEO of Amazon subsidiary Whole Foods Market, serves on The Motley Fool's board of directors. Randi Zuckerberg, former director of market development and communications for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, also serves on The Motley Fool's board of directors. Keith Speights has invested in Amazon and Meta Platforms. The Motley Fool has invested 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.
