Artificial Intelligence (AI) has come a long way in recent years. Businesses are starting to realize tangible savings from implementing this technology into their operations, triggering massive investments. Statista predicts that the AI market will grow 28% annualized through 2030 to reach $826 billion.
If you have extra cash that you don’t need to pay down debt or other expenses, now may be the perfect time to start building a portfolio of AI-enabled growth stocks that could take off over the next few years. Here are two companies trading at reasonable valuations that can help you take advantage of this one-of-a-kind investment opportunity.
Before consumers and businesses can use AI-based products, the required IT infrastructure must be in place to train the AI models. This is a fantastic opportunity for Advanced microdevices(NASDAQ:AMD)one of the leading suppliers of graphics processing units (GPUs) and other chip-based products.
AMD provides various chips for several markets, including consumer PCs and data centers. But strong demand for Instinct MI300 GPUs fueled a 122% year-over-year increase in data center revenue last quarter, making the segment the company’s biggest revenue driver overall. horizon 2025.
Meanwhile, AMD is still experiencing incredible demand for its central processing units (CPUs). Large enterprises continue to use AMD’s Epyc processors, including Metaplatformswhich has deployed more than 1.5 million Epyc chips in data centers to power its social media platforms.
AMD’s spending on research and development has accelerated over the past five years. The company hired thousands of engineers to work on AI, culminating in the launch of the MI300, but there’s more to come. Management predicts that the market for AI accelerators, or data center GPUs, will reach $500 billion by 2028.
With strong demand for AMD’s data center chips contributing to a 31% year-over-year profit increase last quarter, the stock can be expected to trades at a high valuation. But it’s surprising to see shares trading at just 24 times 2025 earnings estimates. This is in line with the average valuation of the broader market and suggests that AMD shares may be undervalued.
AMD stock is expected to rebound in the new year and could continue to generate wealth-generating returns.
Alphabet(NASDAQ:GOOG)(NASDAQ:GOOGL) stocks have generated market-beating returns over the past decade. But the search leader continues to report strong revenue and profit growth, which has sent the stock up 36% over the past year. Its investments in AI could generate more returns for investors in 2025 and beyond.
It’s been a busy year for Google. The company announced new versions of its Gemini AI model, which powers all of its products. Google also impressed investors recently by unveiling its Willow chip for quantum computing, showing how the company could be a technology leader in this booming market.
Although Google generates the bulk of its revenue from advertising, it relies on AI to provide relevant search results and content recommendations to keep billions of people coming back to its products and, therefore, to increase its advertising revenue. Alphabet has spent $49 billion on capital expenditures over the past four quarters, some of which is dedicated to data centers and AI to fuel more growth.
Alphabet benefits from a growing digital advertising market, which bodes well for profitable growth that can be reinvested in technology. A 15% year-over-year increase in revenue last quarter helped push Alphabet’s trailing 12-month net income to an impressive $94 billion.
As Alphabet proves it can post strong financial results while investing in cutting-edge technologies like quantum computing, the stock could be worth much more than its current valuation. Shares can be purchased for just 21 times the consensus estimate for next year’s earnings, giving Google investors years of solid returns.
Have you ever felt like you missed the boat by buying the best performing stocks? Then you will want to hear this.
On rare occasions, our team of expert analysts issues a “Doubled” actions recommendation for businesses that they believe are on the verge of collapse. If you’re worried that you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
Nvidia:If you invested $1,000 when we doubled down in 2009,you would have $356,514!*
Apple: If you invested $1,000 when we doubled down in 2008, you would have $47,762!*
Netflix: If you invested $1,000 when we doubled down in 2004, you would have $485,594!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Ballard holds positions in Advanced Micro Devices. The Motley Fool posts and recommends advanced micro devices, alphabet, and meta platforms. The Motley Fool has a disclosure policy.
