It's been a few years since the AI boom really took off. Some trends have already emerged, like the continued splurge on data centers and other hardware to train and operate AI models at a global scale. And these days, models are increasingly able to code and perform other tasks autonomously.
You also have new industries inching closer to milestones, such as humanoid robotics and self-driving vehicles. That makes this an exciting time for long-term investors looking to profit from the innovation that will play out over the next decade.
While there's still a lot we can't know yet, there are some AI stocks that have firm seats at the table. Buying and holding these stocks will likely make you money over the next 10 years.
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1. Apple
Many have soured on Apple (AAPL 2.05%) for its slow start in AI. Its long-awaited revamp of Siri has hit another snag, and management has spent almost nothing on data centers, relative to other "Magnificent Seven" companies. But suddenly, Apple is looking increasingly wise not to rush into spending billions of dollars on AI projects. Investors have begun raising concerns about whether some AI companies will ever see decent returns on the fortunes they've already spent.
NASDAQ: AAPL
Key Data Points
Meanwhile, Apple continues to churn out iPhones and other consumer hardware as it does best. Apple linked up with Alphabet for the foundation AI model behind its upcoming Siri update, and still has 2.5 billion iOS devices to serve as a distribution network for whatever product or technology the company eventually launches. This is still a world-class business, making it a no-brainer to buy and hold.
2. ASML Holding
AI companies are expected to invest hundreds of billions of dollars in chips and other hardware this year. ASML Holding (ASML 2.29%) doesn't have the glamor of some other companies, but it's one of the core pick-and-shovel AI stocks. ASML designs and builds machines that print microscopic patterns onto silicon wafers. The most advanced chips use a process called extreme ultraviolet (EUV) lithography, and ASML is the only company that sells the machines capable of performing it.
NASDAQ: ASML
Key Data Points
It's literally a monopoly. ASML's expertise and patented EUV machine technologies form a wide competitive moat. ASML's customers have far too much to lose from potential downtime or quality breakdowns to risk problems by switching to another manufacturing method. ASML should have no problem continuing to sell its machines, as increasingly advanced AI chips require similarly complex machines to produce them.
3. Palo Alto Networks
Companies that integrate AI into cybersecurity will likely win as other companies turn to them for protection against increasingly advanced threats. Palo Alto Networks (PANW +1.26%) is an industry leader in next-generation firewalls, which act as a cyber-doorman, preventing bad actors from entering a network. Palo Alto Networks has expanded into new security fields, acquiring CyberArk Software, an identity security company, and Chronosphere, an observability platform.
NASDAQ: PANW
Key Data Points
The company has also begun pushing platformization as its sales strategy, bundling offerings to upsell customers on a one-stop-shop approach. Management reported in its latest earnings report that 1,450 customers had signed onto platformization, a 30% increase from a year ago. Palo Alto Networks has over 70,000 customers, so platformization could define the company's growth over the next decade.
