If there's any question whether artificial intelligence (AI) is still in its early innings, investors just need to look at Oracle's projection that its cloud infrastructure revenue will soar from $10.3 billion to $144 billion in the coming years, with contracts from top AI customers already locked in.
However, given the company's debt and need to spend heavily, I think there are better AI plays out there. Let's look at three no-brainer AI stocks to buy today.
1. Nvidia
No company has capitalized on the AI infrastructure buildout more than Nvidia (NVDA 0.52%). Its graphics processing units (GPUs) went from being a niche product for video games to becoming the gold standard for training large language models (LLMs).
Meanwhile, the company has built a wide moat around this business largely through CUDA. Nvidia gave away the proprietary software platform for free years ago to universities and research labs, where much of the early work on AI was being done. This led not only to a generation of developers who learned to code on CUDA, but also to most AI software being built on top of the platform. Switching to a different platform would require rewriting massive amounts of code and retraining teams, which would cost both time and money. That's one of the biggest reasons why Nvidia currently has a GPU market share of over 90%.
Nvidia also saw where the market was heading and moved into networking. Its NVLink technology allows its GPUs to work together as a single unit, which is key for massive AI workloads. And its 2020 acquisition of Mellanox Technologies made its networking business even stronger: Last quarter, data center networking revenue nearly doubled to $7.3 billion.
As the buildout of AI infrastructure continues to ramp up, Nvidia is set to remain one of the biggest beneficiaries. While there are competitors, Nvidia is still the company to beat in AI, and it has plenty of room to run.
2. Alphabet
Alphabet (GOOG -1.13%) (GOOGL -1.29%) is another no-brainer way to invest in AI. A year ago, the narrative was that AI would hurt Google Search, but the opposite has happened. Search revenue growth actually accelerated last quarter as features like AI Overviews, Google Lens, and Circle to Search drove more queries, not fewer. Even better, many of these AI-driven queries are often focused on shopping, which plays right into Alphabet's massive advertising network.
A recent federal court ruling was a big win for the company. The court not only allowed Alphabet to hold on to its Chrome browser and Android smartphone operating system, but also allowed it to keep its default search deal with Apple largely intact. That preserves Alphabet's huge distribution edge, and means that Google will remain the internet's starting point for billions of users. After the announcement, it even appears that Apple may expand its relationship with Alphabet to have its Gemini model power Siri.
AI is also driving growth at Alphabet's cloud computing division, Google Cloud. Revenue soared 32% last quarter, and profits more than doubled, as demand for AI infrastructure continues to outstrip supply. Alphabet is one of the few companies with a vertically integrated AI stack, running its own Gemini models on its custom-built AI chips. That gives it both cost advantages and the ability to tailor performance to its customers' needs.
Throw in emerging bets of robotaxis and quantum computing, and all these factors make Alphabet a top stock to own.
Image source: Getty Images.
3. Amazon
Amazon (AMZN -0.13%) has been using AI for years, but it's now integrating it across its entire business. The place where this is most evident is its cloud computing unit, Amazon Web Services (AWS). Revenue climbed 17.5% last quarter to $30.9 billion as customers rushed to build AI models and applications on its infrastructure.
The company offers services, such as Bedrock and SageMaker, that make it easy for customers to train and deploy AI models. Now it's also moving into agentic AI, with new tools like Strands and AgentCore helping customers build and run AI agents safely. Much like Alphabet, Amazon has developed its own custom chips to give it an edge in both cost and performance.
Perhaps less noticeable, but just as impactful, is Amazon's use of AI within its e-commerce business. The company's logistics network is being optimized by AI at every level -- from deciding which warehouses should hold inventory, to finding the fastest routes for deliveries, to guiding drivers to hard-to-find drop-off points. Its DeepFleet AI model now manages over 1 million robots inside Amazon warehouses, with some newer robots able to detect damaged products before they ship and even repair themselves. All of this is driving operating leverage in Amazon's e-commerce business, where North American revenue rose 11% last quarter but operating income climbed 47%.
With e-commerce efficiency gains and AWS growth both being powered by AI, Amazon is a great stock to own for the long term.
