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These two dominant internet companies are leveraging AI to better serve their massive user bases.
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They both have virtually unlimited financial resources that support large capital investments in AI projects.
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Investors will find that the stocks trade at reasonable valuations.
We're quite possibly at the start of what could be a major technological shift with the onset of artificial intelligence (AI). No one knows what new products, services, or companies will be created. However, with estimates of 25-fold growth in the AI market between 2023 and 2023 (according to a UN Trade and Development report), this can't be ignored.
Smart investors will consider ways of betting on this trend. But you don't have to search far and wide. If you're ready to invest $3,000, here are two top AI stocks to buy and hold for the long term.
Two of the most successful businesses of all time are Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Meta Platforms (NASDAQ: META), which rose to dominance as the internet became much more prevalent. Without a doubt, these are two of the best AI stocks investors should look at.
Alphabet and Meta are in very advantageous positions. They already have thriving business models with offerings that reach vast audiences. Alphabet has six products that each serve more than 2 billion people. During the month of June, Meta's family of apps had 3.48 billion daily active users.
I believe a sound strategy is to find businesses that are leveraging AI to improve their existing offerings. In this way, the new technology can be used to upgrade the user experience instead of trying to create something completely new. These companies are doing a great job in this regard.
Alphabet's Gemini model is embedded in its various products and services. And Search, which investors have worried could easily get disrupted by chatbots, counts more than 100 million monthly active users combined on the AI Mode feature in the U.S. and India.
Meta is using AI to provide better content recommendations. This is working so well that it led to a 6% jump in time spent on Instagram in the latest quarter.
These companies generate their revenues primarily from digital advertising efforts. They're both utilizing AI to help their customers create more effective, creative, and successful ad campaigns. Meta founder and CEO Mark Zuckerberg called out the opportunity of improving the ad experience.
"If we deliver on this vision, then over the coming years I think that the increased productivity from AI will make advertising a meaningfully larger share of global GDP than it is today," he said on the first-quarter earnings call in 2025. This could lead to much more revenue down the road.