There's been a surge in tech stocks over the last year, which has seen the Nasdaq-100 Technology Sector index rise 47% in the last 12 months. Increased interest in budding industries like artificial intelligence (AI) has rallied investors, sending countless stocks skyrocketing. Suffice it to say that AI has created a lot of millionaires over the last year. Meanwhile, the sector has shown no signs of slowing.
According to Grand View Research, the AI market hit a valuation nearing $200 billion in 2023 and is projected to expand at a compound annual growth rate of 37% through 2030. The trajectory will see the industry reach nearly $2 trillion by the end of the decade, suggesting that the market is nowhere near hitting its ceiling and it's not too late to invest in AI.
So, here are three millionaire-maker artificial intelligence stocks to buy right now.
1. Nvidia
You might be sick of hearing about Nvidia (NVDA 0.03%) by now. The company has featured in countless headlines over the last year as bullish investors have sent its stock rising 218% since last April. However, all eyes have been on this chipmaker for good reason, and it likely still has much to offer new investors thanks to its powerful position in AI.
In 2023, Nvidia captured an estimated 90% market share in AI graphics processing units (GPUs), the chips necessary for training and running AI models. The company got a head start compared to its rivals, which has likely secured its dominance in the budding market for years.
In its most recent quarter (the fourth quarter of 2024, which ended in January), Nvidia's revenue increased by 265% year over year to $22 billion. This monster growth was primarily thanks to a 409% increase in data center revenue, reflecting a spike in AI GPU sales.
Nvidia remains on a promising growth path, and earnings per share (EPS) estimates seem to support its potential.
Data by YCharts.
The chart above shows Nvidia's earnings could hit $36 per share by fiscal 2026. Considering the overwhelming demand for GPUs over the next couple of years, I'd expect the forward P/E to hover around similar levels under similar macro-economic conditions. So multiplying the expected 2026 EPS by its forward price-to-earnings ratio (P/E) of 36 yields a stock price of $1,296 -- an upside of 48% form current priec levels.
Considering the company's current position, that projection would see Nvidia's stock rise 46% over the next two years. The company may not replicate last year's growth, but it would still beat the S&P 500's 15% growth since 2022.
2. Advanced Micro Devices
Like Nvidia, Advanced Micro Devices' (AMD 1.78%) role as a leading chipmaker gives it massive potential in AI. The company's stock has climbed 85% over the last year, rallying Wall Street with its growing prospects in the industry.
AMD was slightly late to the AI party as Nvidia beat it to the market. However, AMD is investing heavily in the industry and has formed some lucrative partnerships that could take it far in AI over the long term.
Last December, AMD unveiled its new MI300X AI GPU. The chip was designed to compete directly with Nvidia's offerings and has already caught the attention of some of tech's most prominent players, signing on Microsoft and Meta Platforms as clients.
AMD's earnings have yet to reflect its investment in AI. However, its recent quarterly earnings suggest it's moving in the right direction. In its fourth quarter of 2023, AMD's revenue rose 10% year over year to $6 billion, beating analysts' expectations by about $60 million. The company's AI-focused data center segment posted 38% revenue growth.
Data by YCharts.
AMD's earnings are projected to reach $7 per share over the next two fiscal years. Again like Nvidia, I expect AMD's forward P/E of 50 to continue hovering at similar levels which implies a share price of $350 by 2026, and by extension, a doubling of stock price from today's levels.
3. Amazon
Shares in Amazon (AMZN 0.75%) have risen 77% in the last year, no doubt creating millionaires along the way.
The company has leading positions in multiple tech areas, including e-commerce, the cloud market, gaming, consumer products, and more. However, all eyes have been on Amazon's AI efforts over the last year. As the operator of the world's biggest cloud service, Amazon Web Services (AWS), the company has the potential to leverage its massive cloud data centers and steer the generative AI market.
In 2023, AWS responded to increased demand for AI services by introducing a variety of new tools. Amazon is even using AI to boost its retail site and announced an AI shopping assistant dubbed Rufus ahead of its latest earnings release.
Amazon is moving to become a major threat in AI over the long term, but it also has a lucrative retail business that makes its stock too good to pass up.
Data by YCharts.
Amazon's earnings are expected to reach nearly $7 per share over the next two fiscal years. In a similar calculation to Nvidia and AMD, multiplying that figure by the retail giant's forward P/E of 43 yields a stock price of $301, which could see its shares increase by 65% by fiscal 2026.
As a result, Amazon is a millionaire-maker stock worth considering in 2024.
