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Artificial intelligence has been shaking up industries for decades now. With the groundbreaking moves AI is making, it’s becoming increasingly evident that artificial intelligence is here to stay and it’s the future.
Little wonder, troops of companies are jumping into the AI-bandwagon. Since 2000, there has been a 14x increase in the number of active AI startups.
In 2018, the number of worldwide AI startups stood at 3,465. According to the OECD report, it was estimated that more than $50 billion was invested in AI startups during the period 2011 through to mid-2018.
Another report by Grand View Research, “the global artificial intelligence market size is expected to reach $390.9 billion by 2025″.
AI is gold, and we’ve heard, not all that glitters are gold.
It’s easy to figure out that investing in AI stock would be a wise investment. But not all AI stocks are worth your penny and sadly there are not many AI stocks available to the public.
AI stocks are rare and good ones are even rarer.
It was really hard for me, researching and studying a lot of publicly traded companies that are using AI at the core of their products and services. In order to create this list of the best artificial intelligence stocks to not just buy but hold for the long term.
Note: I am a firm believer in Warren Buffet’s value investing and buying to hold for the long term. As such, these principles are key to this selection.
Here are the best artificial intelligence stocks, in 2023, to buy and hold for the long-term:
1. Alphabet (GOOG)
Alphabet is a multinational conglomerate that was created in 2015 through a corporate restructuring of Google. In essence, Alphabet is the parent company of Google and several former Google subsidiaries.
It is one of the world’s most valuable company and has over ten subsidiaries.
Alphabet is a conglomerate in which most of its subsidiaries are deeply involved in artificial intelligence development and deployment.
It has various product lines that dominate or leads its market.
For instance, Google has 92.54% of the global search engine market share and dominates in the US digital ad market.
Alphabet’s subsidiary, Waymo, is leading in the development of self-driving cars, a market that is projected to garner $556.67 billion by 2026.
When Alphabet (NASDAQ: GOOG) went public in 2004, its stocks were sold at 54.16USD and now (at the time of writing) it’s sold at 1,073.00USD (over 1,900% increase), after fifteen years.
More important is the consistency of its growth over that period.
At 1,073.00USD per share, one would probably think that the Alphabet stock although attractive is expensive.
But that’s not so. In fact, it’s much cheaper than you may expect.
Andrew Tseng writing on the Motley Fool wrote that “several of its (Alphabet’s) big growth businesses have huge long-term potential but appear to be barely contributing profits today”.
Developing subsidiaries like Waymo, DeepMind, and X are burning lots of Alphabet’s profits (in billions), however, their potential impact on the Alphabet’s future profitability and growth cannot be overstated.
If there is one AI stock to buy and hold for the long-term; it’s Alphabet’s stock.
[Here’s why Alphabet stock is a buy and hold for the next decade: The Motley Fool]
2. Microsoft (MSFT)
Of course, everybody knows that OpenAI ChatGPT is a big deal and Microsoft’s investment in the leading AI startup has strengthen it’s position as a leading a company to invest in.
Microsoft is a household name, a multinational technology company that offers various products and services.
Some of these include cloud services, computer software, personal computers, and consumer electronics.
Microsoft has also been involved in artificial intelligence development and deployment long before companies like Google, Facebook, and Amazon came to life.
And today, it’s still a leading force in AI development and deployment.
Microsoft’s use of AI in its video game business has seen it dominate the market in the US.
The company has invested billions of dollars in artificial intelligence and it’s gradually reaping profits.
Azure, its cloud computing service is packed with AI-powered tools that are giving it a strategic and competitive advantage in the cloud computing market that reached $555 billion in 2020.
Ian Copper wrote on the Investor Place, “With Microsoft quickly becoming a leader in the cloud market, it’s tough to bet against the stock”.
And according to Will Ashworth, “the two biggest growth drivers for Microsoft are the cloud and artificial intelligence”.
The odds are in Microsoft’s favor when it comes to profiting from the huge and profit laden AI market.
Is Microsoft (MSFT) a stock to buy and hold for the long term?
3. NVidia (NVDA)
Nvidia has proven that it’s a stock for the long-term, despite the deep fall in 2018 (which it has recovered from).
NVidia Corporation commonly referred to as NVidia, is a tech company that designs chips and graphic processing units (GPU).
You can talk about them as chipmakers.
To hit the ground running, NVidia is one of the most formidable AI stocks to buy and hold for the long-term.
Its track record speaks for itself.
NVidia Corporation designs its GPUs for the gaming and professional markets and its chip for the automotive and computing market.
The corporation went public on January 22, 1999, at which point its stocks sold for 1.64USD but 21 years later, it sells for 240.84USD (that’s an over 14,500% increase).
Swallow that! 14,500% increase.
If you had bought 1,000 NVIDIA stock when it first went public, your investment would have been worth over $14.6 million.
But the journey is not over, NVidia is really just getting started.
Some of John Ballard’s 11 reasons to buy NVidia tock and never sell, are the obvious fact that:
- It has a history of outperformance
- It dominates the graphic processing unit (GPU) market. A market projected to reach $157.1 billion by 2020
- Optionality in self-driving cars
On the impending $556.67 billion self-driving car market, NVidia got its hands all over it. NVidia is venturing into the development of the self-driving car, while also selling chips to other companies developing self-driving cars.
If there are three AI stocks that promise expanding growth opportunities, NVidia is one of them.
4. Amazon (AMZN)
Amazon perhaps needs no introduction, other than the fact its stock has grown over 100,000% since it first traded publicly in May 1997.
In the past five years, its stock has grown over 45%.
Amazon dominates eCommerce and cloud computing while playing being a major player in numerous other markets. Like the smart home market, movie and music streaming, payments, and healthcare.
Amazon doesn’t shy away from using Artificial intelligence to gain a strategic or competitive advantage in whichever market it’s playing.
It’s a multinational technology company that focuses on artificial intelligence, eCommerce, cloud computing, and digital streaming.
Amazon has over 25 subsidiaries through which it diversifies and penetrates different markets.
There is Amazon Robotics that manufactures mobile robotic fulfillment systems, Ring that manufactures a range of home security products, and Amazon Web Services that provides on-demand cloud computing platforms and APIs.
Francisco Javier Garcia on SeekingAlpha wrote that “Amazon is one of the best long-term investment options in the current technology sector”.
Similarly, Beth McKema wrote on The Motley Fool, “Amazon stock remains a good buy… however … only investors who are long term focused should consider buying shares”.
Amazon is big, has a wonderful track record, and is in diverse profitable markets. It has acquired and invested in a lot of AI startups.
It also has its hands on self-driving cars through its investment in Aurora, a leading self-driving car company.
With Amazon, the long-term future is simply promising.
5. Adobe (ADBE)
Adobe is a multinational software company that focuses mainly on creative software products. Its most popular products range from Adobe Flash, Photoshop, Adobe Illustrator, to Adobe Creative Clouds.
Adobe dominates huge markets and is consistently beating analyst’s revenue and EPS growth expectations.
In the past five years, its stock has grown over 400%.
Adobe dominates markets by giving itself a strategic and competitive advantage through its deployment of artificial intelligence.
Adobe Sensei (its AI system) is used to help its customers/users create effortlessly, make informed decisions, and target marketing for better results.
For the past few years, Adobe stock has outperformed S & P 500 consecutively. Adobe is in three markets with a lot of room to grow, and lots of profit to draw.
The three markets Adobe currently operates are in the Digital Media Capture and Editing Solutions (a $33 billion market, Document Cloud (a market around $13 billion), and Customer Experience Management (a market valued at $84 billion).
Remarkably, Adobe stock is said to be currently undervalued by analysts.
David Jagielski wrote on The Motley Fool, that “a good growth stock can be very valuable for an investor’s portfolio, as the returns can be significant, especially when a company is able to consistently grow over the years. Adobe (NASDAQ: ADBE) is a great example of such a company.”
Other AI Stocks to Consider
The above five artificial intelligence stocks are potentially great stocks to buy and hold for the long-term.
But there are other promising AI stocks you should equally consider.
Apple (AAPL) is a unique stock, one that Warren Buffet has been buying a lot of in recent times, consider watching this tech giant’s stock.
Facebook (FB) is another good AI stock, as a company, Facebook has been and is investing billions of dollars into artificial intelligence. This, of course, is with the hope of reaping lots of profits and from its track record, Facebook is capable of such.
Tesla (TSLA) is promising but volatile. It’s a leader in self-driving car development and Electric Vehicles, and one of my favorite companies. Tesla is a good stock for the long term.
The FinTech stock using AI to consider for the long-term is Paypal. As a reminder, also do consider Salesforce and Synopsys stocks they both have great potential especially in the artificial intelligence market.
Henry John is a Stock Portfolio Manager that focuses on companies developing cutting-edge technologies.
Keeping track of cutting-edge techs, companies and stocks is what I do almost everyday. And I love it. Whether it’s artificial intelligence, 5g, or autonomous vehicles; I’m all in.
I’m a self-made millionaire who made most of his money investing in technology companies while working in finance.
Yes! I owe it all to tech and finance.