3 Artificial Intelligence (AI) Stocks to Buy and Hold for Decades

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By: Aquib Nawab


It's clear that AI is more than just a stock market sensation and also a remarkable innovation set to impact the world significantly. According to a PricewaterhouseCoopers (PWC) study, AI could contribute over $15 trillion in economic value to the global economy by 2030.


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Let's begin with Nvidia, a company that stood out in 2023 with an impressive performance. Nvidia has secured a dominant market share in AI chips, reaching as high as 90%.

1 - Nvidia - The Dominant Force in AI Chips

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Nvidia - Deloitte Research

According to Deloitte, the AI chip market could grow to between $110 billion and $400 billion by 2027. Nvidia's current company wide sales for the past year stand at $45 billion, showing room for growth.

Credits: Nvidia

Analysts foresee substantial long-term earnings growth for Nvidia, with an estimated annual compound rate of 42%. Considering this, Nvidia's current forward P/E ratio of 51 appears reasonably priced, particularly for investors looking to capitalize on AI's potential.

Nvidia - Long-Term Earnings Potential

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Alphabet, the parent company of Google, excels in capturing and utilizing data effectively. Google Search and YouTube, two of Alphabet's key assets, together amassed 280 billion visits in November. Data plays a pivotal role in Alphabet's ad business, underpinning its continued growth.

2 - Alphabet - Sitting on a Data Gold Mine

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Alphabet - Ad Revenue and Free Cash Flow

Alphabet's ad revenue experienced substantial growth, reaching $65.5 billion in Q4. This impressive ad revenue stream generates significant free cash flow, reinforcing Alphabet's financial strength. The company strategically utilizes cash to repurchase shares and boost earnings per share, ensuring a solid long-term foundation.

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Alphabet's vast data resources position it to leverage AI effectively in various aspects. AI can enhance advertising strategies and support the development of AI products, such as Bard, a ChatGPT competitor. This potential for AI innovation within Alphabet offers investors further upside potential.

Alphabet - AI Innovation Potential

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Super Micro Computer specializes in building modular server systems for corporations. Building AI computer systems involves complexities that most companies prefer to avoid, making Super Micro Computer's expertise invaluable. The company has maintained a solid reputation since the early 1990s when corporate computing gained momentum.

3 - Super Micro Computer - A Key Partner for Businesses

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Super Micro Computer - Recent Growth

Super Micro Computer's Q2 revenue in fiscal year 2024 skyrocketed by 103% year-over-year, reaching $3.66 billion. This impressive 73% growth over Q1 revenue indicates that AI's impact on its business is still in its early stages. Companies are increasingly turning to Super Micro Computer for efficient AI system deployment.

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The market currently prices Super Micro Computer's stock at 27 times forward earnings. Analysts anticipate a 25% long-term earnings growth, which suggests an attractive PEG ratio of just over 1. While nothing is guaranteed, Super Micro Computer's strong reputation in the AI industry bodes well for potential future returns.

Super Micro Computer - Valuation and Potential

Credits: TheStreet

2 Promising Stocks with Strong Growth Potential for 2024 and Beyond