The incredible potential of artificial intelligence (AI) has helped power strong gains for tech stock this year. On the other hand, valuations for many AI stocks have recently pulled back, and some top players in the space continue to trade at significant discounts compared to previous highs. 

With the artificial intelligence revolution still just starting to unfold, now could be a great time to build long-term positions in companies that are positioned to win big from this century's most transformative tech trend. If you're aiming to capitalize on the rise of AI, read on to see why two Motley Fool contributors identified these top companies as top buy-and-hold plays right now. 

AI will power new growth phases for Amazon

Keith NoonanThanks to its incredible technology and resource advantages, I think that Amazon (AMZN 1.16%) has a very good chance of being one of artificial intelligence's biggest winners. With the stock still down 24% from its high and multiple AI tailwinds on the horizon, now looks like a smart time to load up on the tech giant. 

The rise of artificial intelligence looks poised to help the company's profit-driving Amazon Web Services (AWS) segment enter a renewed growth phase. As the largest player in the cloud infrastructure space, Amazon has more customers than any of its competitors. It also has access to more data. Because data is the fuel that helps power and improve artificial-intelligence models, Amazon has an important advantage in the AI race. But Amazon is hardly resting on existing laurels when it comes to AWS.

For years, the company has been designing custom chips to power customers' artificial intelligence software through its cloud data centers. It's also rolling out software tools to make AWS a go-to destination for building and expanding AI software. Through Amazon Bedrock, customers are able to take advantage of existing large language models that can be customized to their needs and used to create, run, and scale artificial-intelligence applications. 

Even better, I believe AI has the potential to radically improve profitability for the company's online retail operations. Last year, the company's e-commerce focused North America and International business segments accounted for $433.9 billion of the company's $514 billion in sales. At the same time, these segments posted a combined operating margin of -2.4% and an operating loss of $10.6 billion.

As AI opens the door for improved warehouse automation and autonomous delivery services, Amazon should be able to reduce operating costs as a percentage of revenue for its e-commerce business. With the massive sales base for its online-retail business, even relatively modest improvements to operating margins in e-commerce stand to make the overall business far more profitable. Artificial intelligence could be the key to turning Amazon's online retail empire into a massive profit generator.  

Netflix is using AI to help you find content to binge-watch

Parkev Tatevosian: Artificial intelligence can be implemented in many forms, including large language models, driverless technology, and recommender systems. One growth stock that benefits from the rising effectiveness of artificial intelligence is Netflix (NFLX -1.03%). Better recommender systems keep users engaged for longer, increasing the likelihood they keep their Netflix subscription. Fortunately for investors, the stock is not prohibitively expensive. 

With abundant content, Netflix aims to highlight the most relevant content for each subscriber. If it is successful at this task, people will get more value from their subscriptions and stay subscribed. Moreover, those folks would be willing to pay the inevitable price increases Netflix will try to implement over the coming years. Netflix increased revenue from $8.8 billion to $31.6 billion from 2016 to 2022. Helping subscribers derive more value could help the company grow sales further.

I am usually unimpressed with revenue growth unless it results in improved profitability. Netflix is not one of those businesses with unprofitable growth. Indeed, in the same years mentioned earlier, Netflix's operating income jumped from $380 million to $5.6 billion. Given the gain on the top line, it would be reasonable to expect Netflix to boost profits further from these levels. AI can also help Netflix allocate content budgets more effectively by highlighting the films and series most likely to succeed.

NFLX PE Ratio (Forward 1y) Chart

NFLX PE Ratio (Forward 1y) data by YCharts

In my opinion, Netflix stock is moderately priced at a forward price to earnings of 28. Consumers prefer to watch their content over streaming connections, adding millions of new subscribers annually. There is a good likelihood that if you buy Netflix stock now and hold it for the very long term (a decade or more), it will cause an increase in your wealth.