Finance
3 Artificial Intelligence (AI) Stocks That Could Make You a Millionaire
Unless you’ve been investing from under a rock, you might know that artificial intelligence (AI) is all the rage on Wall Street these days. That is not without reason; According to Statista research, the AI market will reach $184 billion this year and grow to more than $184 billion $800 billion by 2030.
In other words, there is still time to position your portfolio to benefit from these powerful growth tailwinds.
Life-changing investment returns is a high bar and a term that is probably used too easily. However, if you pick the right stocks, a large and growing industry can turn modest investments into millions.
Here are three potential millionaire-making candidates that long-term investors should look at for their long-term portfolio.
1. The obvious winner
Nvidia (NASDAQ: NVDA) This is probably not a secret at this point. The multibillion-dollar giant was an early winner as AI companies fought over their GPU chips to power their AI models. Some estimates put Nvidia’s market share for AI chips as high as 90%, a near monopoly in what could be a $400 billion market, according to rivals. Nvidia has long specialized in chips for demanding computing applications, but its proprietary CUDA software has been integral in helping users easily unlock the chips’ full computing power for AI applications.
Importantly, Nvidia probably doesn’t have enough room to grow Market capitalizationwise to make you a millionaire. It is already one of the largest companies in the world. However, years of steady demand for AI chips could ensure that Nvidia has enough cash to generate excellent investment returns by returning profits to shareholders. dividends (yes, Nvidia pays one) and stock buybacks. Nvidia’s CEO, Jensen Huang, is confident in the company’s competitive position. He joked that Nvidia’s product is so good that competitors could give it away for free, but it still wouldn’t have enough value to displace Nvidia.
Time will tell how true that is, as a $400 billion market will attract endless competitive efforts to dethrone Nvidia. However, you could argue that knocking Nvidia off the mountain will only get harder as the chips become more widespread and Nvidia’s deeper pockets expand.
2. The future technology giant
Palantir Technologies (NYSE:PLTR) is increasingly becoming a household name among investors. The secrecy of its cooperation with the US government and its allies had long shrouded the company in mystery. However, Palantir has aggressively (and successfully) branched out into commercial markets. Palantir helps create and deploy custom software on its three platforms: AIP, Gotham, and Foundry. The software can be thought of as an organization’s operating system, analyzing data to support decision-making in real time.
A little imagination could illustrate the types of use cases Palantir could have within government, where it is a close partner across the Department of Defense. The company is also loaded with $3.6 billion in cash and has no debt. The company generates cash flow and is also profitable under Generally Accepted Accounting Principles (GAAP). Analysts believe that Palantir’s long-term profits could grow at an average annual rate of 26%, meaning profits would double every three years.
That growth rate is enough to compound over a 10- to 20-year time horizon, making Palantir a great buy-and-hold candidate. The company still only has 554 customers, leaving plenty of room for customer expansion in the coming years.
3. The underdog you miss
SentinelOne (NYSE:S) is probably not one of the first three names mentioned when someone is asked to name three cybersecurity companies. However, underestimating its potential could cost you money. SentinelOne uses artificial intelligence to hunt for malicious network and device threats. While traditional antivirus software looks for known threats against a database, AI enables SentinelOne to identify and isolate never-before-seen threats based on how the AI maps every file and action a computer takes. It can search for “suspicious” actors.
The company has received praise for its product and regularly receives recognition from third-party technology companies such as Gartner. Despite fierce competition from existing security companies and next-generation rivals CrowdStrike, SentinelOne continues to grow rapidly. The company could surpass $800 million in revenue this year and is rapidly improving its margins as revenue grows faster than costs. Do not worry; SentinelOne has enough money to finance the company for years until it eventually starts turning a profit.
The advantage of SentinelOne is that it is a premium product, but it is a small company with a market cap of only $6.5 billion today. Long-term success could easily make SentinelOne stock a multibagger, so it’s worth keeping an eye on the company as a potential long-term investment with more risk but more reward than your run-of-the-mill names.
Should You Invest $1,000 in Nvidia Now?
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Justin Pope has positions in SentinelOne. The Motley Fool holds positions in and recommends CrowdStrike, Nvidia, and Palantir Technologies. The Motley Fool recommends Gartner. The Motley Fool has one disclosure policy.
3 Artificial Intelligence (AI) Stocks That Could Make You a Millionaire was originally published by The Motley Fool
