Investing in these two stocks could provide ample exposure to AI for any investor.
We may be on the brink of a significant technological transformation due to the rise of artificial intelligence (AI). While no one can predict the specific new products, services, or companies that will emerge, a UN Trade and Development report forecasts a 25-fold growth in the AI market by 2023, which is impossible to overlook.
Savvy investors will look for ways to capitalize on this trend. Fortunately, there’s no need to search extensively. If you’re prepared to invest $3,000, here are two premier AI stocks worth considering for long-term investment.
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Key Players of the Digital Era
Two of the most successful companies in history are Alphabet (GOOG 1.27%) (GOOGL 1.23%) and Meta Platforms (META -0.26%), which gained prominence as the internet became more widespread. They are undoubtedly two of the prime AI stocks to watch.
Both Alphabet and Meta are well-positioned. They possess established business models that reach extensive audiences, with Alphabet offering six products that serve over 2 billion users. In June, Meta’s suite of apps recorded 3.48 billion daily active users.
Harnessing AI for Growth
A prudent strategy is to identify firms that employ AI to enhance existing products and services. This approach allows companies to improve user experiences rather than inventing entirely new concepts. Both Alphabet and Meta are excelling in this regard.
Alphabet’s Gemini model is integrated into its various services. Concerns over disruptions to Search from chatbots are alleviated by the fact that the AI Mode feature attracts over 100 million monthly active users in the U.S. and India.
Meta leverages AI to enhance content recommendations, resulting in a 6% increase in time spent on Instagram in the last quarter.
Stability and Investment
Both companies are heavily investing in AI. Alphabet and Meta plan to spend a combined $154 billion on capital expenditures by 2025, with expectations of further increases. Given their robust financial positions—Alphabet reported $95 billion in cash and marketable securities at the end of Q2, while Meta had $47 billion—concerns about the uncertain returns on these investments are mitigated.
Moreover, these companies are not only financially sound but are generating tens of billions in profits each quarter, allowing them to quickly adapt and maintain leadership in the AI landscape.
Affordable Access to AI Leaders
The compelling aspect of investing in Alphabet and Meta is that investors do not need to overpay for the opportunity to be involved in the AI space. Currently, they trade at the lowest price-to-earnings ratios among the “Magnificent Seven” stocks.
With an investment of $3,000, you could acquire approximately six shares of Alphabet and about two shares of Meta—possibly all the AI exposure you need.
Neil Patel does not hold any of the stocks mentioned. The Motley Fool also has positions in and recommends Alphabet and Meta Platforms. For more information, refer to The Motley Fool’s disclosure policy.
