Artificial intelligence (AI) is being touted as potentially the most transformative technology movement of the 21st century. While some big leaps forward made headlines recently, the good news for investors is that the AI revolution is just getting started, and it has the potential to deliver incredible returns for those who take a buy-and-hold approach with the right companies.
If you're looking for long-term investments that can help you profit from the AI revolution, read on for a look at two AI-related companies you can confidently buy and hold forever.
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1. Amazon
While artificial intelligence projects from OpenAI, Microsoft, and other big players generated lots of attention lately, many investors seem to overlook Amazon's (AMZN 3.21%) strengths and opportunities in the space. The e-commerce and cloud computing giant has access to tremendous amounts of data it can use to feed AI algorithms, and it stands to see huge benefits from the implementation and ongoing evolution of AI technologies.
Even better, investors can take advantage of the market's overly pessimistic stance on the tech giant's outlook. Trading down roughly 46% from its high and boasting one of the strongest overall businesses in the world, Amazon stands out as a great buy for investors looking to benefit from the progression of AI.
In addition to improving the customer experience of its online retail platform and providing new tools for AWS users, I think advances in AI will ultimately play a key role in the robotics revolution that will radically shift the profitability picture for Amazon's e-commerce business. There's a good chance that a combination of factory automation and evolution for autonomous vehicles will lift margins for its massive e-commerce business. The company recently announced a successful trial for its Zoox self-driving taxi division, and this AI-powered autonomous driving tech has the potential to be a stand-alone sales driver and a complement to the online-retail segment.
As far as being an "AI stock" goes, Amazon isn't getting the attention it deserves yet. With the company's main business segments set to benefit from AI initiatives and already enjoying strong competitive moats, shares look like a great buy-and-hold investment right now.
2. CrowdStrike
If I had to pick a handful of industries that are likely to see strong growth over the next decade no matter what twists and turns the economic and geopolitical backdrop serves up, cybersecurity would be near the top of the list. CrowdStrike's (CRWD 1.46%) software for endpoint protection helps ensure that mobile devices, computers, servers, and other hardware can't be used in cybercrime attacks. CrowdStrike was ahead of the curve in centering AI as a foundation for cybersecurity services, and the company is on track to benefit from powerful demand tailwinds.
Progression for AI technologies is creating an arms race in the cybersecurity space. As AI continues to advance, it will become easier than ever for bad actors to launch large-scale, highly sophisticated attacks. In turn, this necessitates cybersecurity companies to keep pace with rising threat vectors and increasingly intelligent attacks. Thankfully, these capabilities have been built into CrowdStrike's Falcon platform, and the company's software is designed to learn and adapt with each new kind of threat that it comes into contact with.
The adaptive AI that's at the heart of the company's Falcon software creates a powerful network effect. When a new kind of attack on a single customer is detected by Falcon, all other customers benefit from the data and knowledge generated from the incident. Better performance means that more customers will have incentives to join the platform. More customers joining the platform means that more threats will be detected, once again improving the overall platform's capabilities and improving the overall value proposition.
CRWD PE Ratio (Forward) data by YCharts
While the company has a growth-dependent valuation and trades at approximately 56 times this year's expected earnings, CrowdStrike's business performance and long-term growth opportunities can more than justify current pricing levels for the stock. Revenue grew 54% last year to reach $2.24 billion, and non-GAAP (adjusted) net income soared 130% to reach $1.30 per share.
While macroeconomic pressures are still depressing value for growth stocks, the AI cybersecurity arms race is just starting to heat up. CrowdStrike is already providing mission-critical protection capabilities for many customers, and the software specialist looks poised to thrive as advanced cybersecurity services become increasingly essential.
