The artificial intelligence (AI) market boom started in early 2023 when tech stocks needed it the most. Companies were dealing with the aftermath of the economic downturn a year ago, which led to Nasdaq-100 Technology Sector 40% will fall in 2022. However, the launch of OpenAI's ChatGPT revived the industry and reminded investors of the tech stock's vast growth potential. As a result, the same index has increased by 88% since January 1, 2023.
All tech companies have ventured into AI, an industry estimated to reach close to $2 trillion in spending by the end of this decade. Creative technology could potentially boost countless sectors as demand for AI services and chips is likely to increase.
Despite this explosion of growth over the past 18 months, it's not too late to invest in the market and reap the rewards of its long-term growth. Here are two AI stocks to buy handover fist in July.
1. Intel
Intel (NASDAQ: INTC ) AI has been somewhat neglected among the rally. While rivals like. Nvidia (NASDAQ: NVDA ) And Advanced Micro Devices (NASDAQ: AMD ) Their stocks have seen gains of 745% and 144% since the start of last year, with Intel's share price up a more moderate 18%. A series of challenges has exhausted Wall Street over the past decade, including the loss of market share in the chip industry and the end of profitable partnerships with it. apple.
However, Intel has announced significant structural changes to its business model over the past year that could lead to a change in fortunes for the chipmaker. The company is focusing its attention on two high-growth markets: AI and manufacturing. As a result, Intel unveiled its Gaudi 3 AI accelerator this year, undercutting Nvidia in price and offering similar performance.
Meanwhile, the company is building chip plants across the U.S. as it works to become the top manufacturing leader and become the primary chip fab in the country. The move could allow Intel to take advantage of growing chip demand across the market as companies like Nvidia and AMD outsource their manufacturing.
Additionally, the data in the table above shows that Intel's stock is a bargain compared to its competitors. Its fairly low price-to-earnings (P/E) ratio suggests its stock offers far more value, making it a no-brainer this July.
2. Alphabet
Like Intel, the alphabetOf (NASDAQ: GOOG) (NASDAQ: GOOGL ) The stock is trading at a significantly better value than its competitors. The company is in tough competition with cloud giants. Microsoft (NASDAQ: MSFT ) And Amazon (NASDAQ: AMZN ) As AI has boosted the entire industry. Alphabet has the third-largest market share in cloud computing (behind Microsoft and Amazon), but is still catching up.
Meanwhile, the chart below shows that Alphabet's shares likely offer more value than their rivals. Google Co.'s low P/E and price-to-free cash flow ratio suggest that Alphabet could be one of the most valuable stocks in AI.
In the first quarter of 2024, Alphabet's revenue rose 15% year over year to $81 billion, beating analysts' expectations by about $2 billion. The company benefited from a 14% increase in Google Services revenue and a 28% increase in Google Cloud sales. Alphabet's cloud revenue growth is particularly impressive because it beat Microsoft's Azure and Amazon Web Services in cloud growth in the quarter, with sales for those platforms up 21% and 17% year-over-year.
Cloud computing has become a key growth area in AI as businesses increasingly use such services to integrate the technology into their workflows. As a result, Alphabet has invested heavily over the past year in expanding its AI offerings, introducing new tools to Google Cloud, adding creative features to Google Search, and improving its advertising services.
Alphabet hit $69 billion in free cash flow this year, only strengthening the argument for its stock. The data shows that the tech giant has the financial resources to continue investing in its business and keep up with its competitors. That, along with its bargain price point, makes Alphabet a stock to buy handover fist this month.
Should you invest $1,000 in Intel right now?
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Suzanne Frey, an Alphabet executive, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, is a member of the board of directors of The Motley Fool, an Amazon subsidiary. Danny Cook has no positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Microsoft and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short August 2024 $35 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a Disclosure Policy.
2 Artificial Intelligence (AI) Stocks to Buy Handover Fist in July was originally published by The Motley Fool.