The rise of artificial intelligence (AI) looks poised to be the biggest technology shift since the internet. It's already helping some companies score incredible wins. With rising demand for semiconductors capable of powering advanced AI applications, Nvidia's stock has rocketed 193% higher across 2023's trading.
Nvidia has been one of AI's biggest winners so far, but it's not even close to being too late to cash in on this incredible tech trend. If you missed out on the initial salvos of the AI revolution and are looking for more opportunities, read on to see why two Motley Fool contributors think that investing in Amazon (AMZN 3.43%) and CrowdStrike Holdings (CRWD 2.03%) would be a smart move.
AI could propel Amazon to higher levels
Parkev Tatevosian (Amazon): If you missed out on Nvidia, you need not worry. The AI trend is likely to lift many stocks higher. Amazon in particular is positioned to benefit from the rising effectiveness of AI. The online retailer has multiple ways it can use AI.
And it starts with the logistics of delivering millions of items to people's homes worldwide. Amazon spent $21.8 billion on shipping costs in its most recent quarter, which ended on Sept. 30. If it can use AI to more efficiently route products for delivery, it could save the company billions.
Also, the company's recommender systems can surface products consumers will likely purchase, and AI can enhance that, too. An incremental increase in sales on its website can add billions in revenue for a company that generated $514 billion in sales in 2022.
AMZN PEG ratio (forward 1y) data by YCharts; PEG = price/earnings-to-growth.
Fortunately for investors who missed out on Nvidia, Amazon's stock is not prohibitively expensive. It's currently trading at a price/earnings-to-growth ratio of 0.722; a reading below 1 in this metric suggests a good value for investors.
If you're bullish on AI, as I am, Amazon could be an excellent way to benefit. Just remember: There are no sure things with investing, and the scenario mentioned above is no exception.
The intersection of AI and cybersecurity is hugely promising
Keith Noonan (CrowdStrike): The cybersecurity arms race is heating up, and CrowdStrike is ahead of the pack. The company is the leading provider of cloud-based software used to protect hardware devices and internet networks from attacks.
When businesses and institutions sign up for CrowdStrike's Falcon cybersecurity platform, they're getting AI-powered defenses with adaptative capabilities. As Falcon comes into contact with new threats, the software system updates its threat profiling and defensive capabilities.
This means that all customers on the company's network benefit from improved protection as other customers' devices and networks come into contact with new attacks.
Amid a rising tide of threats, CrowdStrike has been posting strong net revenue retention rates: 63% of customers now use at least five modules on Falcon, 41% use six or more modules, and 24% use seven or more.
The company said that it effectively met its benchmark of a 120% net revenue retention rate in the second quarter, meaning that existing customers increased their spending roughly 20% compared to the prior-year period. Even though many clients have become more cautious with spending due to macroeconomic concerns, CrowdStrike continues to show that it can effectively expand business relationships with its customers.
The company has also continued to add customers at an encouraging clip. The land-and-expand business model powered sales 37% higher annually to reach $731.6 million in this year's second quarter. Profitability also took another major leap forward: The cybersecurity leader's adjusted earnings per share soared 106% year over year to reach $0.74.
CrowdStrike is serving up strong results even in the face of some headwinds, and it stands to see long-term tailwinds stemming from AI trends in the cybersecurity space. With the company's stock down 40.5% from its high and its market capitalization sitting at under $42 billion, CrowdStrike Holdings still has explosive potential.
