It seems virtually certain at this point that artificial intelligence (AI) will be one of this century's most transformational technology trends. Leading companies in the space stand to see incredible growth stemming from the evolution of these new capabilities, and many top AI players still trade at huge discounts compared to their long-term potential.
While the AI revolution is heating up at a rapid pace right now, the market is still generally taking a cautious approach to growth stocks, and risk-tolerant investors have opportunities to capitalize on this disconnect. If you're looking for stocks that can help you profit from the rise of AI, read on for a look at two companies that are worth investing in today.
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1. Snowflake
"Big data" is a term that's been used a lot over the last decade; it reflects the explosion of information that's been created as more devices have come online and business and communications migrate to digital channels. But the term may actually obscure just how much data growth still lies ahead. In relative terms, it's probably fair to say that we're still living in the age of "small data."
Data is the fuel that is powering the rise of AI technologies, and Snowflake (SNOW -1.61%) is a platform-agnostic company that's helping its customers get the most out of the information they generate from multiple, distinct cloud services. With Snowflake's Data Cloud platform, businesses can combine information generated through Amazon, Alphabet, and Microsoft's otherwise walled-off cloud infrastructure services. Customers can also make use of Snowflake's data warehousing and analytics tools and build and run apps directly on top of Data Cloud.
Snowflake stock is a pick-and-shovel play for benefiting from the evolution of cloud services, data analytics, and artificial intelligence. Crucially, the evolution and significance of these trends remain in the very early stages of unfolding. Tokyo Electron CEO Toshiki Kawai estimates that data generation will increase tenfold by 2030 and still be in the early stages of ramping up at that point. From there, he anticipates that global generation will grow another hundredfold by 2040.
As it stands, Snowflake is positioned to be a key provider of services that push data analytics and AI technologies forward, and the stock could go on to be a huge winner for long-term investors.
With its price roughly flat across 2023's trading and down 64% from its high, Snowflake isn't getting much love as an AI stock just yet. There's a good chance that will change at some point, and those who take a buy-and-hold approach to the stock could go on to enjoy tremendous returns.
2. CrowdStrike
There's an arms race happening in cybersecurity right now. While AI has the potential to improve business and everyday life in many ways, it's paving the way for increasingly advanced cyberattacks. Bad actors have more incentive than ever to gain access to business and government networks, and one way this can be achieved is by exploiting hardware devices as weak points. CrowdStrike (CRWD 0.13%) is providing AI-powered cybersecurity tools capable of identifying and thwarting these attacks.
CrowdStrike's Falcon platform has become the go-to choice for businesses seeking cybersecurity solutions that can protect endpoint hardware, and it's been adding customers big and small at an impressive pace. The cybersecurity specialist increased its total customer count by roughly 41% last year to reach more than 23,000.
Customers also tend to add additional services after onboarding with the Falcon platform. CrowdStrike posted a dollar-based net revenue retention rate of 125.3% in the fourth quarter, reflecting a 25.3% average spending increase from clients that were already on board with its platform.
Trading down 55% from its high, this growth stock offers fantastic long-term return potential and a risk profile that's mitigated by category-leading services and a backdrop of powerful industry tailwinds.
The cybersecurity leader has already built a strong base of recurring sales, and it still has huge opportunities for long-term expansion ahead. At the end of its last fiscal year, CrowdStrike's annual recurring revenue (ARR) had increased 48% year over year to reach $2.56 billion. By the end of its 2026 fiscal year, the company estimates that its ARR base will have grown to $5 billion, and sales should have plenty of room to continue climbing from there.
For investors seeking top AI plays, CrowdStrike is a standout candidate that looks primed to deliver market-crushing performance.
