For the past few months, Wall Street has been divided on whether the year 2023 will end with a bull rally or a potential recession. However, popular opinion has slightly tipped in favor of the bullish camp, especially after the preliminary data from the Bureau of Economic Analysis indicated that U.S. real gross domestic product (real GDP, a measure of inflation-adjusted economic activity) grew at an annual rate of 4.9% in the third quarter -- the fastest it has grown in the past two years.

In either case, artificial intelligence (AI) continues to be the dominant investment theme of 2023. Since AI is getting deeply embedded in our daily lives and is definitely not a passing trend, it makes sense for investors to opt for stocks with proven and already monetized technologies.

Here's why Meta Platforms (META -1.73%) and Qualcomm (QCOM -0.69%) fit the bill and can prove to be attractive investments in the long run.

1. Meta Platforms

Shares of social media giant Meta Platforms have seen a meteoric rise of nearly 162% so far in 2023 -- a remarkable feat after a pretty turbulent performance in 2022. CEO Mark Zuckerberg's "year of efficiency" initiative (a focus on aggressive cost-cutting and reducing bureaucracy in 2023), has played a pivotal role in the company's positive transformation.

Meta's "family of apps" business segment, which includes social media apps such as Facebook, Instagram, WhatsApp, Messenger, and Threads, continues to be the cash cow and generate a solid stream of advertising revenue. In the third quarter, the segment reported $33.6 billion in advertising revenue, up 24% on a year-over-year basis. The operating income margin of this business was 51.9% in the third quarter, a robust improvement from a 34.3% margin in the same quarter of the prior year.

Meta has been leveraging recommendation AI technology to boost user engagement and monetization across its social media apps. These recommendation improvements have led to a 7% increase in time spent on Facebook and a 6% increase on Instagram in the third quarter. The company is also using AI and machine learning-powered tools, together called Meta Advantage, to help small businesses create impactful ads and enable advertisers to quickly understand the conversion potential of these ads.

Meta is now gearing up to focus on business AI (leveraging AI capabilities in business messaging) in 2024. The company aims to reduce labor costs by setting up business AI chatbots that can help customers with commerce and support activities. Besides bringing in a new revenue stream, business messaging can also help Meta reduce its overreliance on digital advertising.

However, all is not perfect for the company. Previously known as Facebook, Meta changed its name to reflect its interests beyond social media and advertising in other areas such as virtual- and mixed-reality hardware and the metaverse. While the company has invested billions of dollars in these businesses through its Reality Labs division, this business still remains a loss-making venture.

Although this challenge cannot be ignored, Meta also boasts of several advantages such as a broad customer base, ad-pricing power, improved financial health, and robust AI initiatives. In this context, even if the long-term future of Reality Labs is mired with uncertainty, Meta can be considered to be an attractive pick.

2. Qualcomm

Leading mobile chip giant Qualcomm reported mixed results in the fourth quarter of fiscal 2023 (ended Sept. 24). Although the company surpassed consensus revenue and earnings estimates, revenue was still down by 24% year over year to $8.6 billion and adjusted net income declined by 36% year over year to $2.3 billion.

However, things may soon get better in fiscal 2024 -- as is evident by the company's guidance for the first quarter of fiscal 2024 (ending Dec. 25). The company expects revenue to be in the range of $9.1 billion to $9.9 billion, implying a flat performance on a year-over-year basis. This is a significant improvement from the rapid revenue decline posted by the company in the past year. With the company seeing early signs of stabilization in demand for 3G, 4G, and 5G handsets globally, including China, the probability of meeting the guidance remains high.

Qualcomm has also been focusing on developing AI-focused chips for smartphones and Windows 11 personal computers (PCs). The company is making major strides in the on-device generative AI market and has introduced the Snapdragon 8 Gen 3 Neural Processing Unit (NPU) and Snapdragon X Elite CPU to run large language models (LLMs) locally on smartphones and PCs. As the first to release technology that can support LLM models based on billions of data parameters on local machines, Qualcomm has emerged as a leader in on-device generative AI technology for smartphones, PCs, and automobiles.

Qualcomm's excessive revenue dependence on Apple has been a sore point in its investment thesis. The problem was exacerbated when it became clear that Apple was developing its own 5G chips -- to the point where Qualcomm did not forecast any revenue from Apple in 2024. In this context, the recent renewal of the agreement between Qualcomm and Apple to supply Snapdragon 5G processors for smartphone launches in 2024, 2025, and 2026 can prove to be a solid positive for Qualcomm.

Hence, against the backdrop of stabilizing demand for consumer electronics, a potential turnaround in financials, dominance in on-device generative AI, and the renewal of the agreement with Apple, Qualcomm is a smart AI pick now.