For years, you were more likely to find artificial intelligence (AI) in a science fiction story than in the day's headlines. Now, all that has changed.
Increasingly, the world is turning to AI to solve our most complex problems. And as a result, the corporate world is racing to build better and more fantastic AI-powered tools.
The prize for winning? Billions of dollars in profit and millions more for investors. So, let's have a look at three AI stocks with millionaire-making potential.
Image source: Getty Images.
Advanced Micro Devices
Advanced Micro Devices (AMD +3.50%)is one of the world's premier semiconductor corporations. Long known as a designer of semiconductors for personal computers (PCs), gaming devices, and servers, AMD is directly challenging Nvidia's dominance of the AI chip market by introducing its new MI300 series of chips.
NASDAQ: AMD
Key Data Points
Although it's still to be determined whether AMD can take significant market share from Nvidia, it is clear that both companies have plenty of room in the lucrative AI market. Indeed, in an interview last month, AMD CEO Lisa Su said as much herself, noting: "There are going to be multiple winners in this market ... customer demand is very high. We continue to work with our customers to deploy as quickly as possible."
In turn, expectations are rising. Wall Street now expects AMD to grow revenue 17% over this year to $26.4 billion -- an all-time high. Earnings per share (EPS) are also expected to soar to $3.75 per share, up 42%.
Palantir Technologies
Palantir Technologies (PLTR 1.87%), the Denver-based software company, is at the forefront of big data analytics. Palantir caters its services to organizations awash in data. And in today's world, the number of those organizations is rising rapidly.
NASDAQ: PLTR
Key Data Points
Indeed, Palantir counts many governments, hospitals, banks, pharmaceutical companies, and educational institutions among its clients.
The company uses AI to help clients sift through data, look for trends, and spot patterns. While much of the company's defense work -- roughly 50% of revenue -- is understandably opaque, the other 50% is commercial. Examples include helping hospitals create dynamic schedules for staff and driving operational efficiencies for transportation companies.
Palantir recorded $2.1 billion in revenue over the last 12 months, with quarterly revenue increasing by 17% year over year. What's more, analysts expect sales to accelerate in 2024. According to estimates, Palantir's revenue should rise to $2.7 billion, up 20% from last year.
Nevertheless, Palantir is not for every investor. While the company is profitable, its lofty valuation (shares trade with a price-to-earnings multiple above 200) will put it out of reach for value-oriented investors, and the company pays no dividend, making it unappealing for those seeking income from their investments.
However, for those investors looking for a growth stock with solid fundamentals and a long runway of growth ahead of it, Palantir is a stock worth considering.
Microsoft
Microsoft (MSFT 0.59%) rounds out my list of millionaire-maker AI stocks. The company, which is now neck and neck with Apple as the world's largest company by market cap, may benefit more than any other organization from the AI revolution.
NASDAQ: MSFT
Key Data Points
First off, the company's close partnership with ChatGPT maker OpenAI has grown even closer in the weeks since OpenAI CEO Sam Altman was fired and then rehired. A new OpenAI board of directors is taking shape, with reports naming Microsoft Vice President Dee Templeton as a new "observing" board member.
In other words, Microsoft's influence at OpenAI continues to grow stronger, which puts the company in a strong position to commercially benefit from further AI innovations that OpenAI may develop.
Second, Microsoft's size and scale mean it can quickly deploy new generative AI features into its well-known and widely used software. Microsoft's Office suite and, increasingly, its Bing search engine already incorporated many AI features. In the coming years, expect Microsoft to roll out even more awe-inspiring generative AI tools. For all those reasons -- along with other non-AI reasons -- Microsoft remains a corporate juggernaut.
Granted there are some concerns about Microsoft right now. Chief among them, the price of its shares. Some investors may balk at the company's hefty valuation -- shares trade well above the stock's long-term average price-to-sales ratio.
MSFT PS Ratio data by YCharts
Yet, for the truly long-term investor, who is likely dollar-cost averaging, any time is a good time to buy a great company. And, to me, there is little doubt that Microsoft is exactly that.
