The artificial intelligence (AI) market was valued at $137 billion in 2022 and is projected to expand at a compound annual growth rate of 37% through 2030, according to Grand View Research. The sector has the potential to boost countless industries, including cloud computing, consumer tech products, healthcare, education, e-commerce, and more.
As a result, it's not surprising that so many tech companies have pivoted their businesses to AI. Demand for AI services is soaring as millions of consumers and companies look for ways to boost productivity with the technology. Now is an excellent time to consider investing in the industry before it's too late.
Here are two AI stocks that could help make you a fortune.
1. Microsoft
Microsoft (MSFT +4.61%) shares are a no-brainer for anyone interested in backing an AI company. The tech giant arguably has more earnings potential in the market than any other company.
Microsoft was early to the AI party, investing $1 billion in ChatGPT developer OpenAI back in 2019. Then it invested a further $10 billion in the start-up earlier this year, which increased its stake to 49%.
The partnership gave Microsoft access to some of the most advanced AI technology available, allowing it to leapfrog competitors like Amazon and Alphabet. However, it's not just OpenAI's technology that bolsters Microsoft's potential in the sector. It's the combination of OpenAI's software and the wide reach of Microsoft's productivity and cloud services.
Between platforms such as Office and Azure, millions of people and organizations have come to depend on Microsoft. Consequently, its gradual introduction of AI features across its product lineup could lead to big gains.
The company is already moving to monetize its AI offerings by launching an AI assistant for Microsoft 365 it calls Copilot. The new tool will launch at $30 a month, on top of the price of a 365 subscription.
NASDAQ: MSFT
Key Data Points
Alongside opportunities in productivity, Microsoft's growing position in AI could lead to revenue growth for its cloud service Azure. The platform holds the second-largest market share in cloud computing at 22%. Meanwhile, it is steadily expanding its library of AI services in an effort to attract new customers.
Microsoft has vast resources as one of the world's most valuable companies, with a market cap above $2 trillion. Its substantial stake in OpenAI and dominance in productivity software could see its stock skyrocket as the AI market expands, and you won't want to miss out.
2. Advanced Micro Devices
As the AI market has developed, so has interest in chip stocks. AI models require powerful graphics processing units (GPUs) to run, and chipmakers have much to gain as demand soars. Nvidia has gotten a head start in the sector thanks to its years of dominance in GPUs. However, Advanced Micro Devices (AMD +1.15%) is gearing up to challenge Nvidia in 2024 and could enjoy a significant boost to sales if it succeeds.
AMD holds the second-largest market share in discrete GPUs at 10%. Its share pales in comparison to Nvidia's 87%. However, AMD's is significantly higher than those of other companies attempting to break into the AI chip market, such as Intel and Amazon.
Meanwhile, the industry is growing desperate for increased competition. Nvidia's command of the sector has seen the cost of AI hardware soar. As a result, AMD's AI expansion has massive support from various tech companies, which look forward to a reduction in chip prices.
NASDAQ: AMD
Key Data Points
In June, AMD unveiled the next installment in its line of MI300 chips, which it describes as its most powerful GPU ever. The new chip will begin shipping next year.
If the company can offer a better price-to-performance ratio than Nvidia, or even equal it, it could have an excellent chance at snapping up market share in the high-growth industry. Additionally, AMD will be well-positioned to meet demand if Nvidia experiences any supply strains.
Data by YCharts
Excitement over AI sent many chip stocks soaring in 2023. While that benefited current stockholders, it has raised the cost of entry for new investors. As a result, most of the market's stocks do not offer much value. However, the chart above shows AMD has the lowest forward price-to-earnings ratio out of the four most prominent names in AI chip development. The figures suggest AMD is the best-valued chip stock right now, and one of the best ways to invest in the burgeoning industry.
AMD shares skyrocketed 307% over the last five years. The company's coming product launch and its solid position in the chip industry indicate significant earnings potential over the long term. AMD is on a promising growth trajectory that could help make you a fortune in the coming years.
