The market for artificial intelligence (AI) services expanded significantly in recent years as companies scramble to automate repetitive tasks, crunch large amounts of data to make smarter decisions, and power up a new generation of autonomous machines and vehicles.

But over the past year, many of the market's leading AI stocks were crushed as inflation, rising interest rates, and other macro headwinds drove investors toward more conservative stocks. This market will likely remain shaky in the short term, but investors who want to profit from the long-term expansion of the AI market should take a closer look at these three promising stocks.

A digital brain emerging from a circuit board.

Image source: Getty Images.

1. Mobileye

Driverless vehicles leverage a wide range of AI technologies to replace human drivers. One of the most promising plays in that nascent market is Mobileye (MBLY -2.42%), the Israeli chipmaker that was spun off from Intel in a fresh IPO this October.

Mobileye is the world's top producer of advanced driver assistance systems (ADAS), which use a mix of cameras, sensors, and chips to help drivers park their cars, stay in a single lane, use adaptive cruise control features, and access other advanced driving features. These systems are powered by Mobileye's own EyeQ computer vision chips, and its latest version (EyeQ5) is designed for fully autonomous vehicles. Its manufacturing partner, STMicroelectronics, produces those chips.

Mobileye's revenue declined 10% in 2020 as the pandemic disrupted the auto market, but it rose 43% in 2021 as those headwinds dissipated. It expects its revenue to rise another 31%-32% this year even as it grapples with supply chain constraints at STMicro's plants. Its gross and operating margins are being squeezed by those temporary headwinds, but its adjusted net income still increased 3% year over year in the first nine months of 2022.

Mobileye might not initially seem cheap at 44 times forward earnings and 13 times next year's sales, but its dominance of a bedrock technology for driverless cars justifies that premium -- and makes it a great AI stock to buy.

2. Micron

AI applications require a lot of memory, and that demand generates tailwinds for Micron Technology (MU -4.61%), one of the world's top memory chipmakers. Micron manufactures denser and more power-efficient DRAM and NAND (flash memory) chips than its larger South Korean rivals Samsung and SK Hynix, and it's the only "pure play" memory chipmaker that is publicly traded in the United States. Other memory chipmakers like Western Digital sell a much wider range of products.

Micron's business is cyclical because the memory market usually endures multi-year supply gluts followed by chip shortages. It experienced its last major growth spurt in fiscal 2021 and fiscal 2022 (which ended this September) as the market's robust demand for new memory chips across the PC, mobile, and data center markets outstripped its available supply.

However, that nine-quarter streak of revenue growth ended in the fourth quarter of fiscal 2022 with a 20% year-over-year decline as the cooling growth of the PC market, sluggish sales of smartphones, and other macro headwinds sparked a new cyclical downturn.

As a result, analysts expect its revenue and earnings to decline 40% and 97%, respectively, in fiscal 2023. It might seem counterintuitive to invest in Micron as its growth cools off again, but its stock now trades at just 2 times next year's sales. Therefore, investors who load up on shares of Micron today could be well-rewarded when the next growth cycle starts.

3. Monday.com

On the software front, AI-powered services can help companies streamline their businesses, eliminate redundant positions, improve their digital workflows, and automate repetitive and time-consuming tasks.

Monday.com (MNDY -3.80%) is a great play on that secular trend. Its cloud-based platform enables companies to develop their own custom apps and work management software to suit their own needs, and it also provides pre-built "recipes" for automating common tasks. Its services can be directly integrated into Microsoft's Teams, Adobe's Creative Cloud, and other popular enterprise apps.

Monday.com is still a hypergrowth tech company. Its revenue surged 106% in 2020 and rose 91% in 2021, and it anticipates 65%-66% growth this year, even as it faces tough macro and currency headwinds. It ended the third quarter of 2022 with 1,323 customers that generated $50,000 or more in annualized recurring revenue (ARR) -- representing 116% growth from a year earlier -- and that high-value cohort posted a healthy net dollar retention rate of more than 145%.

Those are stellar growth rates for a stock that trades at 6 times next year's sales. However, investors seem reluctant to buy Monday.com as long as interest rates keep rising, since it's still unprofitable by both GAAP (generally accepted accounting principles) and non-GAAP measures. Those concerns are valid, but investors who aren't worried about a little near-term volatility should still buy some shares of Monday to profit from the AI-driven automation of large companies.