Top 2 AI Stocks for August: Potential for Big Gains
Published Date: 31/08/2024
Graphics processing units (GPUs) have become the go-to for companies' training AI models and large language models like OpenAI's ChatGPT.
The artificial intelligence (AI) market is projected to achieve nearly $2 trillion in spending by 2030, growing at a compound annual growth rate of 37%. This makes it a compelling investment opportunity for companies and investors alike.
Despite the surge in growth since the beginning of last year, the AI industry remains a lucrative space for investors. Chipmakers, in particular, play a crucial role in AI, with advances in the chip industry making it possible for developers to deliver on AI concepts theorized decades ago.
Advanced Micro Devices (AMD) is one such company that has made significant headway in the industry. Although it was slightly late to the AI party compared to its rival, Nvidia, AMD has profited from soaring GPU sales over the last year. The company reported a 9% year-over-year increase in revenue in its second-quarter 2024 earnings, with a significant spike in AI GPU sales.
AMD's data center revenue increased by 115% year over year, while its client division, which includes income from central processing unit (CPU) sales, posted revenue growth of 49% year over year. The company's total operating income for the quarter increased by 18% from 2023, with its quarterly free cash flow up 81% in 2024.
Alphabet (GOOG) (GOOGL) is another AI stock that investors shouldn't sleep on. The company has become increasingly competitive in cloud computing, a quickly expanding area of AI. Its diverse range of products, such as YouTube, Android, Google, and Chrome, gives it countless opportunities to tout its generative software features.
Alphabet's AI strategy sees it playing to its strengths, a scheme it used to gain dominance in advertising. The company has added generative features to Google Search, Android, Cloud, and YouTube, making it a leading provider of AI to businesses and consumers worldwide.
Both AMD and Alphabet offer exciting long-term growth potential in the AI industry. While AMD's price-to-earnings ratio may seem high, its growth potential in AI makes it a compelling buy. Alphabet's stock, on the other hand, offers the most value, making it a bargain AI stock.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, 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. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Microsoft, and Nvidia.
FAQS:
Q: What is the projected growth rate of the artificial intelligence market?
A: The artificial intelligence market is projected to grow at a compound annual growth rate of 37% and achieve nearly $2 trillion in spending by 2030.
Q: Which companies are leading the AI industry?
A: Companies like Advanced Micro Devices, Alphabet, and NVIDIA are leading the AI industry, with significant investments in AI research and development.
Q: What is the role of chipmakers in AI?
A: Chipmakers, such as Advanced Micro Devices and NVIDIA, play a crucial role in AI, with advances in the chip industry making it possible for developers to deliver on AI concepts theorized decades ago.
Q: What is Alphabet's AI strategy?
A: Alphabet's AI strategy sees it playing to its strengths, a scheme it used to gain dominance in advertising, by adding generative features to its products and services.
Q: Why are AMD and Alphabet good AI stocks to buy?
A: Both AMD and Alphabet offer exciting long-term growth potential in the AI industry, with AMD's growth potential in AI making it a compelling buy, and Alphabet's stock offering the most value.