Find the top artificial intelligence (AI) Buying stocks now is not easy. Many AI stocks have boomed amid the release of a significantly improved version of ChatGPT in early 2023. Because of this growth, stocks like Nvidia and Palantir There have been significant increases in a short period.
These increases may leave investors wondering what to buy now. Fortunately, even if finding the “best” AI stocks is elusive, we can assume that AI will likely drive stock gains for years to come, meaning investors aren’t missing out. Under current conditions, these two stocks are likely to become leaders in the AI space and generate significant gains for their shareholders.
Amid the gains made by artificial intelligence in many stocks, investors seem to have forgotten about it Qualcomm (NASDAQ:QCOM). In fact, the smartphone chipset leader has struggled as its 5G upgrade cycle comes to an end.
In addition, apple It has been working for years to develop a 5G modem chipset that can power its iPhone. After years of surrendering and extending its contract with Qualcomm, Apple appears ready to end the supply agreement after 2026.
However, Qualcomm has been advancing AI in its chipsets starting with the Snapdragon 8 Gen 3, which integrates AI capabilities into smartphones. That combined with the upcoming Snapdragon 8 Gen 4 could lead to another upgrade cycle.
Moreover, Qualcomm has been preparing for years for the day when smartphone chips will become a less reliable source of revenue. To that end, it has built businesses in the Internet of Things, automotive, and most recently entered the personal computer space.
These moves have helped growth turn positive again as revenues of $39 billion generated in fiscal 2024 (ending September 29) rose 9% compared to year-ago levels. During that period, Qualcomm trimmed increases in costs and expenses, allowing net income of $10 billion in the fiscal year to rise 40% annually.
Currently, analysts expect revenue growth to remain in the 9% range for fiscal 2025. However, with the stock selling at P/E ratio Of just 17, investors may be overreacting to its slower growth rate, especially given that AMDEarnings multiple of 109. Apple sells for 42 times earnings, and even its primary manufacturer, Taiwan Semiconductor Manufacturing Co., LtdIt trades at 31 P/E. This means Qualcomm stock could rise from multiple expansion alone.
Also, since Qualcomm expects to lose business from Apple, the company has factored that into its 2025 financial estimates. Such an assumption would likely surprise Qualcomm stock to the upside, meaning investors should profit as the company continues to Its growth.
Another technology company that is underappreciated for its artificial intelligence is the parent company of Google alphabet (Nasdaq:Google)(NASDAQ:GOG). This may seem surprising for a company that has been integrating AI into its applications since 2001.
However, the emergence of ChatGPT presents Google Search with its most serious competitive threat in years. And the launch of its own artificial intelligence product, Google Gemini, has not quelled fears that lost search business will hamper its lucrative advertising business.
However, investors should not ignore Alphabet’s vast resources and innovation. Currently, it has a staggering $93 billion in liquidity. That’s down from $111 billion at the end of 2023, but Google’s parent company is now paying dividends and has made significant investments in research and development, paving the way for a potential comeback.
This investment includes not only artificial intelligence, but also spending on technology that can enhance artificial intelligence and quantum computing. To that end, Alphabet has just launched its Willow quantum computing chip.
Quantum computing could redefine the computing industry. Instead of holding the value of a zero or a one like a traditional data bit, qubit, or qubit, it processes zeros and ones simultaneously, dramatically increasing computing speeds. Willow is so fast that he performed a calculation in less than five minutes that a conventional computer had never been able to perform in the entire history of the universe.
Additionally, Willow has made breakthroughs in addressing the error-prone nature of quantum chips. Instead of error rates rising as the number of qubits increases, Willow can do just that reduces Errors with increasing number of qubits. This addresses a major hurdle to making quantum computing technology viable.
Also, despite all the concerns about the company, Alphabet generated $62 billion in free cash flow in the first nine months of 2024 alone. This cash gives the company great flexibility to continue innovating.
Moreover, Alphabet’s P/E ratio of 25 gives it the lowest earnings multiple of the “Magnificent Seven” stocks. This valuation is unlikely to remain at this level as more investors realize the company’s ability to move beyond Google Search.
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Susan Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Will Healy He has positions at Advanced Micro Devices and Qualcomm. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Nvidia, Palantir Technologies, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool has Disclosure policy.
