Unless you've invested from under a rock, you may know that artificial intelligence (AI) is the craze on Wall Street today. That's for good reason; according to research by Statista, the AI market will hit $184 billion this year and grow to more than $800 billion by 2030.
In other words, there is still time to position your portfolio to enjoy these powerful growth tailwinds.
Life-changing investment returns are a high bar and a term probably thrown around too easily. However, if you pick the right stocks, a large and growing industry can turn modest investments into millions.
Here are three potential millionaire-making candidates that long-term investors should check out for their long-term portfolio.
1. The obvious winner
Nvidia (NVDA -0.46%) probably isn't some secret by this point. The multitrillion-dollar giant has been an early winner as AI companies fight over its GPU chips to power their AI models. Some estimates peg Nvidia's market share for AI chips as high as 90%, nearly a monopoly on what could be a $400 billion market, according to rivals. Nvidia has long specialized in chips for demanding computing applications, but its proprietary CUDA software has been integral in helping users easily unlock the chips' full computing power for AI applications.
Importantly, Nvidia probably doesn't have enough room to grow market-cap-wise to make you a millionaire. It's already one of the world's largest companies. However, years of steady AI chip demand could make Nvidia flush with enough cash to drive outstanding investment returns by returning profits to shareholders as dividends (yes, Nvidia pays one) and share repurchases. Nvidia's CEO, Jensen Huang, maintains confidence in the company's competitive position. He quipped that Nvidia's product is so good that competitors could give it away for free, but it still wouldn't be enough value to displace Nvidia.
Time will tell how true that is, as a $400 billion market will attract endless competitive efforts to dethrone Nvidia. However, one could argue that Nvidia only becomes harder to knock off the mountain the more widespread its chips become and the deeper Nvidia's pockets grow.
2. The future tech giant
Palantir Technologies (PLTR -0.33%) is increasingly becoming a household name among investors. Its secrecy in working with the U.S. government and its allies had long shrouded the company in mystery. However, Palantir has aggressively (and successfully) branched to commercial markets. Palantir helps create and deploy custom software on its three platforms: AIP, Gotham, and Foundry. Its software could be considered an organization's operating system, analyzing data to help aid decision-making in real-time.
A little imagination could illustrate the types of use cases Palantir could have within the government, where it's a close partner throughout the Department of Defense. The company is also loaded to the gills with $3.6 billion in cash, carrying zero debt. The business is generating cash flow and is also generally accepted accounting principles (GAAP) profitable. Analysts believe Palantir's earnings could grow at an annualized average of 26% over the long term, meaning profits would double every three years.
That pace of growth is enough to compound over a 10- to 20-year time horizon, making Palantir a great buy-and-hold candidate. The company still has just 554 customers, leaving much room for customer expansion over the coming years.
3. The underdog you're missing
SentinelOne (S -1.60%) is probably not among the first three names mentioned if someone is asked to list three cybersecurity companies. However, underestimating its potential could cost you money. SentinelOne uses artificial intelligence to hunt for malicious network and device threats. While traditional antivirus software would look for known threats against a database, AI enables SentinelOne to identify and isolate never-before-seen threats based on how the AI charts out every file and action a computer makes. It can look for "suspicious" actors.
The company has received accolades for its product, routinely getting recognition from third-party technology firms like Gartner. Despite facing intense competition from legacy security companies and next-generation rivals like CrowdStrike, SentinelOne continues to grow quickly. The business could surpass $800 million in sales this year and is quickly improving its margins as it grows revenue faster than expenses. Don't worry; SentinelOne has enough cash to fund the business for years until it eventually profits.
The upside of SentinelOne is that it's a top-notch product, but it is a small company with a market cap of just $6.5 billion today. Long-term success could easily make SentinelOne stock a multibagger, so it's worth keeping an eye on the company as a potential long-term investment with more risk but more reward than your run-of-the-mill names.
