With the market near all-time highs and murmurs of an artificial intelligence (AI) bubble and even a potential market crash, there are some stocks I still wouldn't sell.
While I'm not expecting a big market pullback, let's look at two stocks I'd continue to hold and likely be buying more of if a crash were to happen.
Image source: Getty Images.
1. Alphabet
I think Alphabet (GOOGL 1.39%) (GOOG 1.43%) is going to be one of the biggest long-term winners in AI. The reason is that AI is pushing the company to innovate, making its products better.
NASDAQ: GOOGL
Key Data Points
I'd argue that OpenAI is actually one of the best things to happen to the stock. Before OpenAI came along, Alphabet was largely viewed as a great company, but one that was bloated and stagnant. However, competition not only brought out the best in Alphabet, but it also highlighted some of the tech innovations it had been working on behind the scenes.
The biggest of these behind-the-scenes innovations was its Tensor Processing Units (TPUs). Alphabet had been using and advancing these custom chips for more than a decade, but it wasn't until recently that investors began to see their importance. These chips give Alphabet a huge structural cost advantage, both within its cloud computing unit and also with training its Gemini large language model (LLM) and running AI inference. Now, even other companies are set to begin deploying Alphabet's chips at scale to run some of their AI workloads within Google Cloud.
At the same time, Alphabet has incorporated its Gemini model throughout its portfolio of products, making them better, which is driving revenue growth. Meanwhile, by incorporating AI into Google Search, Maps, and Gmail, as well as becoming an AI assistant with Android and soon Apple devices, the company is meeting people where they are active every day. That's just a huge advantage that will grow with time.
Right now, Alphabet is in the midst of riding a virtuous cycle, given its vertical integration edge. That's why it's a stock to hold through any market crash.
2. Amazon
NASDAQ: AMZN
Key Data Points
Like Alphabet, I really like what Amazon (AMZN 1.34%) has been doing behind the scenes. The company does not get nearly the credit it deserves in robotics, because it is using them in its own fulfillment centers to drive efficiency rather than selling them to generate revenue. But make no mistake: Amazon is one of the world's foremost companies in robotics.
The company has more than 1 million robots in its distribution centers, all of which are coordinated by its DeepFleet AI model. These robots keep becoming more advanced and able to handle more complex tasks. Meanwhile, Amazon is also using AI to help reduce delivery times through optimizing routes, locating hard-to-find drop-off locations for drivers, and determining which warehouses are best to store certain items. This has been leading to strong operating leverage, with the company seeing its segment-adjusted operating income soar 28% last quarter on an 11% increase in revenue.
And while its custom AI chips are not as battle-tested as Alphabet's, Amazon is also making strong inroads in this area, which should help power its cloud computing results moving forward. It built out a world-class data center for Anthropic using Amazon's Trainium chips, which is still ramping up. Meanwhile, Amazon has been in talks with OpenAI about taking a stake in the company, which would also see the LLM company start to deploy some of its chips for its workloads. The two companies agreed earlier on a seven-year, $38 billion AWS (Amazon Web Services) computing deal, but that would be powered by Nvidia graphics processing units (GPUs).
Given its robotics and e-commerce leadership, combined with its position in cloud computing, Amazon looks like a long-term winner, whether the market crashes next year or not.
