Miss Nvidia? 2 AI stocks you should buy now. | Fool

Analysts at Next Move Strategy Consulting expect the global artificial intelligence (AI) market to grow 20-fold to a whopping $2 trillion by 2030 as technology improves and major companies develop their services. technology giant Nvidia is one of the undisputed winners in this megatrend as it offers the cutting-edge chips needed to power and train AI models.

But investors should also pay attention to how other companies are tackling different aspects of the opportunity. Let’s explore the efforts of Amazon (AMZN 1.84%) And Meta Platform (META -0.17%) can also bring rich benefits to investors.

Amazon

First an online bookstore, then a global e-commerce giant and now a diversified tech giant – Amazon has a long history of reinventing itself across industries. new business. This trend allows the company to continue expanding, even as older ventures mature. AI can help fuel the next leg of long-term growth.

According to Amazon CEO Andy Jassy, ​​innovative AI is “the biggest technological transformation of our lifetime.” But instead of chasing the hype of consumer-facing chatbots like ChatGPT (which has begun to see a decline in usage), Amazon is focusing on content – providing the foundational infrastructure needed to support industry support.

To execute on this strategy, Amazon launched Bedrock, an AI model that AWS customers can train and customize with their own data. If successful, the platform could be a valuable tool for countless startups looking to develop their own AI applications. Amazon’s approach to AI complements its enterprise-focused cloud computing business and insulates it from some of the competition and uncertainty associated with targeting the consumer side of opportunity.

Investors should remember that Amazon’s AI ambitions are not limited to AWS and enterprise customers. AI technology can also improve other aspects of its business, such as search efficiency, customer support and Alexa (Amazon’s virtual assistant technology). The company appears to be in the opening stages of another major transformation.

Meta Platform

Like Amazon, Meta Platforms is another big tech company looking to reinvent itself as its core business (social media advertising) grows. But while its superspace ambitions leave much to be desired, AI could soon catalyze the company’s transformation.

Photo source: Getty Images.

Facebook changed its name to Meta Platforms in 2021, but its efforts to create an immersive virtual world have yet to succeed. Horizon Worlds, its flagship virtual reality (VR) gaming platform, reported 200,000 users by the end of 2022 – far short of its original target of 500,000. That said, Meta’s stock is up nearly 150% in 2023 as investors grow increasingly optimistic that AI technology could soon save the world.

Following the launch of OpenAI’s ChatGPT, Meta Platforms began investing heavily in AI initiatives to improve its existing products and services. There are a lot of things that are easy to do — for example, imagine text-to-speech photo editing for Instagram and Facebook, or AI-powered chatbots on WhatsApp that can carry out conversations like people to users and collect new types of data. But Meta also has the potential to use AI to create new revenue streams.

The company is building new AI-related platforms like AudioCraft, designed to let users create music based on text prompts. These efforts could help drive growth and diversify Meta’s flagship product line.

Compare valuations

With a price-to-earnings (P/E) multiple of 42, Amazon stock trades at a significant premium to S&P 500 the average is 26, and this may reflect the company’s blue-chip status and the relative safety of its AI strategy. On the other hand, Meta Platforms has a P/E of only 19, lower than the market average.

Investors may be worried about the failure of Meta Platforms’ metaverse and the weaker advantage of its AI projects compared to alternatives. With that said, the company’s low price offers more upside potential if its efforts are successful, making the stock still look like a buy.