A $3,000 investment budget may not sound like much at first glance. Investors often invest for retirement, and with $3,000 unable to cover one month of expenses for the average American, that figure may seem like a pittance.
Nonetheless, some of the more astute investors have built fortunes on less capital. With time, such a figure can grow to a massive amount with the right stocks or indexes held for decades. Amid such growth prospects, investors may want to consider three artificial intelligence (AI) stocks with considerable potential for returns.
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Alphabet
If one is going to put together a portfolio of AI stocks, the place to start is likely Google parent Alphabet (GOOGL 2.55%) (GOOG 2.57%). Alphabet has used AI since 2001, and investors saw it as a leader in the industry until ChatGPT put generative AI on the map in 2023.
Despite its release of Gemini soon after, investors have perceived Alphabet as falling behind in this industry. As a result, Google Search's market share is now under 90%, according to Statcounter. This is critical since Alphabet continues to depend heavily on the ad revenue it generates.
However, Alphabet has seemingly endless resources to compete. It pledged to invest $75 billion in capital expenditures (CapEx) this year and holds $95 billion in liquidity.
Moreover, Alphabet has begun diversifying away from advertising. Google Cloud now accounts for 14% of the company's revenue, and assuming autonomous vehicles succeed, Waymo could become a primary revenue source for the company.
Finally, amid the concerns about its business, its price-to-earnings (P/E) ratio is 21, the lowest of the Magnificent Seven. This gives investors the opportunity to buy at a discount while benefiting from the AI-driven transformation of the tech giant.
SentinelOne
SentinelOne (S 1.73%) has built a compelling cybersecurity suite. It based its platform, Singularity XDR, on AI from the beginning, and it specializes in protecting endpoints, cloud workloads, Internet of Things (IoT) devices, and containers.
The cybersecurity industry provides tools that are essential for the cloud and AI, but its competitive nature complicates investing in this sector. Still, Grand View Research expects it to expand at a compound annual growth rate (CAGR) of 13% through 2030, making it likely to grow even with that competition.
Fortunately, SentinelOne continues to beat that growth rate. In the first quarter of its fiscal 2026 (ended April 30), the company reported $229 million in revenue, an increase of 23% over the previous year.
Admittedly, losses have weighed on the company. With the income tax provision rising to $133 million, the company reported a loss of more than $208 million, up from $70 million in the year-ago quarter. Fortunately, free cash flow remains positive at $45 million, which eases the pain of the net loss.
The losses may have also made SentinelOne's valuation more attractive. As a money-losing company, it does not have a P/E ratio, but a price-to-sales (P/S) ratio of 7 is far below most of its most prominent competitors', allowing people to invest in this growth industry at a low cost.
Qualcomm
After years of strength and considerable stock price growth, Qualcomm's (QCOM -0.20%) stock has struggled. Its longtime lead in the smartphone chipset industry is in question as Apple moves to drop Qualcomm as a supplier. The company's heavy dependence on China has also caused doubts in an uncertain geopolitical environment.
However, Qualcomm has long envisioned a day when people and businesses depend less on smartphones. In order to align itself with the future of its industry, it entered chip businesses outside of the smartphone arena.
With those moves, it has diversified into chips for IoT, automotive, PCs, and data centers, and some of these businesses have shown success. In the third quarter of its fiscal 2025 (ended June 29), IoT revenue rose 24%, and automotive revenue increased by 21% over the same period. In comparison, the dominant handset segment grew revenue by 7% over the last year.
Overall, revenue surged 10% higher in fiscal Q3 to almost $10.4 billion. The company kept cost and expense growth in check, meaning the $2.7 billion in net income rose 25%.
Despite that growth, Qualcomm trades at just 16 times earnings. Although it faces challenges, such an earnings multiple likely prices in its struggles. Knowing that, investors may want to consider buying this chip stock before more people notice its emerging business segments and rock-bottom P/E ratio.
