2 trillion dollars in artificial intelligence (AI) stocks to buy and hold forever

WhatsApp Group Join Now
Telegram Group Join Now
Instagram Group Join Now

Large companies are sometimes perceived as having less upside potential than smaller companies. This is one reason why some people hesitate to invest in stocks with market caps over $1 trillion.

But the tech giants Microsoft (NASDAQ: MSFT ) And Meta platforms (NASDAQ: META ) There's a new secret weapon that could allow them to deliver solid returns in the medium term: artificial intelligence (AI). Even beyond that, Microsoft and the Meta platforms have a myriad of “stock forever” qualities.

1. Microsoft

Microsoft was partly responsible for starting Wall Street's recent obsession with AI, which started when ChatGPT hit the scene. Microsoft has been an investor in OpenAI, the company behind ChatGPT.

Since the initial frenzy that made the AI ​​chatbot famous, the two companies have modified their contributions, with Microsoft doubling and increasing its stake in the privately held AI specialist to 49 percent. The partners also offer services that allow other companies to build their own creative AI platform, which Microsoft offers through its cloud computing arm Azure.

According to Microsoft management, more than 65% of the Fortune 500 now use Azure OpenAI services. Those services look particularly promising for the company, not least because cloud computing was already its most important growth driver. Management says Azure continues to gain market share thanks in part to AI.

This is helping Microsoft deliver solid results. In its fiscal 2024 third quarter, which ended March 31, revenue rose 17 percent year-over-year to $61.9 billion, and net income rose 20 percent to $21.9 billion.

Its recent results have been strong, but what makes Microsoft a forever stock? At least three things: First, it's an incredibly innovative company, which is a key factor for it to stay relevant and successful for a long time.

Second, the company has tangible competitive advantages from several sources. Its computer operating system benefits from high switching costs, and it has one of the most valuable brand names in the world.

And third, it has attractive opportunities and a long way to go for growth in many industries, especially AI and cloud computing. Income seekers should also find what they want with this stock: Microsoft is arguably the most attractive dividend stock among the “Magnificent Seven.”

The company has grown its payout by nearly 168 percent over the past decade, and reinvested profits could substantially increase long-term returns for investors. This is another great reason to keep stocks well.

2. Meta-Platforms

Last year, Facebook's parent MetaPlatforms released Llama, a large language model that has become popular in its own right. He has since introduced several new versions of Llama in an open source capacity.

Llama is the backbone of Meta AI, a virtual assistant that the company recently debuted. Meta Platforms has also implemented other related initiatives to expand its business. AI algorithms on Facebook and Instagram that help encourage users to watch reels for longer periods of time are helping the company grow its ad revenue.

That being said, AI doesn't contribute much to Meta's revenue and earnings yet, but that could change, considering the company is positioning itself as a leader in the field. Is.

In the meantime, it still has the largest digital ecosystem — perhaps the largest — of any company worldwide. It ended the first quarter with 3.24 billion daily active users. When ad spending plummeted a few years ago, it navigated the storm, and now it's making a comeback, thanks in part to its vast user base. In the first quarter, revenue rose 27 percent year over year to $36.5 billion. Its net income more than doubled to $12.4 billion.

And the company benefits from the network effect. A website like Instagram becomes more valuable as more people use it — the more people on it, the more useful it is to them, and the more people looking out into it. Would like to join. The same applies to Facebook. MetaPlatforms has also proven to be an innovative company beyond AI. It is one of the leaders in virtual reality.

Innovation, an economic moot in the form of a network effect, and the potential for growth in areas like AI and online advertising make meta-platforms a great stock forever.

Should you invest $1,000 in Microsoft right now?

Before buying stock in Microsoft, consider this:

gave Motley Fool Stock Advisor The analysis team only indicated what they believed. 10 Best Stocks For investors to buy now… and Microsoft was not one of them. 10 stocks that made the cut could generate monster returns in the coming years.

Consider when Nvidia This list was created on April 15, 2005… If you invested $1,000 at the time of our recommendation, You will have $759,759.!*

Stock Advisor Provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks every month. gave Stock Advisor The service is More than four times S&P 500 Returns since 2002*.

View 10 Stocks »

*Stock Advisor will return on June 24, 2024.

Randy Zuckerberg, former director of market development and spokeswoman for Facebook and sister of MetaPlatforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Prosper Junior Bikini has positions in meta platforms. The Motley Fool holds and recommends positions in MetaPlatforms and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a Disclosure Policy.

$2 Trillion in Artificial Intelligence (AI) Stocks to Buy and Hold Forever was originally published by The Motley Fool.

WhatsApp Group Join Now
Telegram Group Join Now
Instagram Group Join Now

Leave a Comment