If you’re looking to invest in a company that’s likely to benefit from artificial intelligence (AI) today and down the road, you might want to consider buying “Magnificent Seven” stock. With a moniker inspired by a 1960s western, these players are technology leaders, and each is investing in the area of AI. One that has become almost synonymous with this hot technology. Nvidia Because this company’s chips power AI — and dominate the industry.
Although Nvidia made a great buy, another stock may make an even better AI bet right now. That’s because the company is likely to benefit from Nvidia’s strength as well as its own AI products and services — and it’s among two other high-growth businesses. On top of that, the company uses AI to streamline its operations, which should increase revenue in the coming years. So, investing in this player gives you a complete AI package and more. Let’s take a closer look at this AI powerhouse to buy now.
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A leader in two growth markets
And this is the top stock Amazon (AMZN 0.53%)A leader in the growth markets of e-commerce and cloud computing. Amazon is positioned to win in these two markets thanks to its revenue track record and leadership in these areas, as well as what it has done to drive growth in recent times.
Faced with rising inflation in 2022, Amazon posted its first annual loss in nearly a decade. Higher costs weigh on consumer wallets and company costs. But Amazon quickly turned things around by improving its cost structure and shifting investment to growth areas like technology infrastructure.
Those efforts worked, helping Amazon report double-digit revenue and a tripling of operating income last year. The company also moved to cash inflows of more than $36 billion from outflows a year earlier. Amazon’s cost-cutting, initiatives to become more efficient across its network, and the expansion of Amazon Web Services (AWS) offerings helped the company manage and recover from difficult times.
And, importantly, these efforts should help Amazon thrive in better times, as a better cost structure will favor earnings growth. In the US, for example, Amazon has shifted from a national to a regional fulfillment model, a move that is lowering its service costs.
Amazon’s AI Capability
So, without considering Amazon’s presence in AI, the stock already looks attractive — but this AI potential makes the picture even brighter. Amazon is poised to take advantage of AI in two ways. The company uses AI to increase efficiency and improve the shopping experience for customers. For example, AI designs optimal delivery routes to get packages to their destination faster, and AI recommends items for customers based on their previous purchases. These and other AI-powered moves reduce Amazon’s costs, and by keeping customers satisfied, keep them coming back.
And another way that Amazon should get an AI win has to do with AWS. The cloud service will benefit from Nvidia’s successes as it offers Nvidia chips and services to customers. Therefore, businesses looking to acquire Nvidia AI products can do so through AWS. And AWS also offers a variety of products and services of its own, from its chips for training to a fully managed service that gives customers access to large language models.
AWS Customer
This means that AWS can meet all or most of a customer’s AI needs, making it a go-to place for those developing AI projects. And because AWS is the world’s leading cloud company, it already has a large audience — an AWS customer interested in launching AI will turn to AWS instead of turning to another cloud provider. is more likely to do so through
Amazon has proven its strength through growing earnings over the years — and in recent times has demonstrated its ability to weather tough times and emerge victorious. And its investment in AI and leadership in cloud services should help it win in this promising technology as well. Amazon trades for 42x forward earnings estimates, which is reasonable considering its market dominance and its AI potential. That’s why this fantastic seven stock might be the best AI bet right now — and one you’ll want to hold for the long term.
John Mackey, former CEO of Whole Foods Market, is a member of the board of directors of The Motley Fool, an Amazon subsidiary. Adria Cimino has positions at Amazon. The Motley Fool has positions and recommends Amazon and Nvidia. The Motley Fool has a Disclosure Policy.