It's hard to believe that two years ago, many of us had never heard of ChatGPT. But for the last 18 months, investors have been flocking to stocks that are trying to get the lead in artificial intelligence (AI). Many analysts believe the growth in this sector will be similar to that of the internet.
It's too early to know if history will repeat itself, but it certainly rhymes. The AI revolution is starting with companies that deal in chips, networking, and hardware. But AI is starting to move into the software sector, which is where individuals will see the real use cases for AI.
In this special presentation, we're giving you the names of seven AI stocks that are still long-term winners. More than that, we'll help explain why these are companies that are worth your long-term capital.
For the most part, the names on this list are some of the biggest names in the technology sector. There's a reason for that. The buildout in artificial intelligence will take capital, and the companies that are well capitalized - either through their existing capabilities or their ability to invest in smaller companies - will be among the best long-term investments.
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- NVIDIA
- Super Micro Computer
- Wolfspeed
- Microsoft
- Meta Platforms
- Amazon.com
- Palantir
#1 - NVIDIA (NASDAQ:NVDA)
It’s easy to think about NVIDIA Corp. (NASDAQ: NVDA) through a short-term lens. NVDA stock has been one of the best-performing stocks in 2024 and 2025. And even after a sharp pullback in July 2024, the stock has recovered most of that loss.
That has many investors wondering what’s next for the stock as earnings approach. But the real story for NVIDIA is likely to play out in years. That’s because the technology needed to enable AI applications continues to change. And that means the graphic processing units (GPUs) that were cutting-edge just 18 months ago are quickly becoming obsolete.
NVDA stock trades at over 51x forward earnings. That valuation may scare off some investors. But analysts continue to raise their price targets ahead of the earnings report. And if the company posts strong earnings, as it's expected to do, this will be an easy stock you shouldn’t be afraid to chase higher.
About NVIDIA
NVIDIA Corporation provides graphics and compute and networking solutions in the United States, Taiwan, China, Hong Kong, and internationally. The Graphics segment offers GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro/NVIDIA RTX GPUs for enterprise workstation graphics; virtual GPU or vGPU software for cloud-based visual and virtual computing; automotive platforms for infotainment systems; and Omniverse software for building and operating metaverse and 3D internet applications.
Read More - Current Price
- $115.59
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 38 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $142.10 (22.9% Upside)
#2 - Super Micro Computer (NASDAQ:SMCI)
Up 119% in 2024, Super Micro Computer Inc. (NASDAQ: SMCI) is delivering NVIDIA-like performance and for good reason. Super Micro is a companion stock to NVIDIA because it provides the servers that house GPUs, Central Processing Units (CPUs), and the like.
However, unlike GPUs, servers are notoriously low-margin businesses. That’s one reason that SMCI stock dropped nearly 20% after its August 2024 earnings report. The company’s gross margin fell by 6% year-over-year (YOY).
But context is crucial to understand what this means for Super Micro. When you’re trying to understand the potential of AI, data centers will be a massive part of that story. The servers in data centers require constant cooling. Super Micro uses liquid cooling technology, which is more efficient than air cooling, and has been willing to sacrifice its short-term margins for market share growth.
As of August 20, 2024, SMCI stock is trading near the middle of its 52-week range. But analysts have a price target that suggests there could be 49% stock price growth in the next 12 to 18 months.
About Super Micro Computer
Super Micro Computer, Inc, together with its subsidiaries, develops and manufactures high performance server and storage solutions based on modular and open architecture in the United States, Europe, Asia, and internationally. Its solutions range from complete server, storage systems, modular blade servers, blades, workstations, full racks, networking devices, server sub-systems, server management software, and security software.
Read More - Current Price
- $439.38
- Consensus Rating
- Hold
- Ratings Breakdown
- 5 Buy Ratings, 11 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $767.33 (74.6% Upside)
#3 - Wolfspeed (NYSE:WOLF)
Wolfspeed Inc. (NYSE: WOLF) is the only small-cap stock on this list of AI stocks to buy for the long haul. The reason for that is because the company is a leader in the silicon carbide (SIC) market. Currently, one of the common applications for SIC chips is the electric vehicle (EV) market. However, they also have the potential to make AI services, such as data centers, more energy efficient.
WOLF stock is down nearly 90% from its all-time high set in 2021. One reason is that small-cap stocks, in general, are under pressure. That’s particularly true for companies like Wolfspeed that are not yet profitable. These companies are facing higher borrowing costs as interest rates have jumped significantly over the last two years.
However, these are the companies that may benefit the most if the Federal Reserve cuts interest rates. Plus, in addition to the opportunity for growth in the AI market, Wolfspeed is a good play on the likely growth in the EV market.
About Wolfspeed
Wolfspeed, Inc operates as a powerhouse semiconductor company focuses on silicon carbide and gallium nitride (GaN) technologies in Europe, Hong Kong, China, rest of Asia-Pacific, the United States, and internationally. It offers silicon carbide and GaN materials, including silicon carbide bare wafers, epitaxial wafers, and GaN epitaxial layers on silicon carbide wafers to manufacture products for RF, power, and other applications.
Read More - Current Price
- $8.60
- Consensus Rating
- Hold
- Ratings Breakdown
- 4 Buy Ratings, 11 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $24.53 (185.3% Upside)
#4 - Microsoft (NASDAQ:MSFT)
Even after a 3.5% pullback since the company’s earnings report in late July, shares of Microsoft Corp. (NASDAQ: MSFT) are still up 12% in 2024 and more than 33% in the last year. The concern coming out of earnings is that the company lowered guidance for overall revenue and, in particular, its cloud business, Azure.
But this is a case where investors should follow Warren Buffett's advice to be greedy when others are fearful. Microsoft is a rock-solid business with a fortress balance sheet. MSFT stock carries a forward P/E ratio of around 32x. That’s not overvalued for a technology stock, particularly a mega-cap name like Microsoft.
And even though nobody will confuse Microsoft with a value stock, it is approaching dividend aristocrat status. Shareholders have enjoyed 22 consecutive years of dividend growth.
The Microsoft analysts' forecast on MarketBeat shows a mixed reaction to the earnings report. The price targets, however, are generally above the consensus target of $494.72. Wedbush is the most bullish, with a target price of $550. Not only is that approximately 10% above the consensus price, but it’s also about 25% higher than the stock’s closing price on August 20, 2024.
About Microsoft
Microsoft Corporation develops and supports software, services, devices and solutions worldwide. The Productivity and Business Processes segment offers office, exchange, SharePoint, Microsoft Teams, office 365 Security and Compliance, Microsoft viva, and Microsoft 365 copilot; and office consumer services, such as Microsoft 365 consumer subscriptions, Office licensed on-premises, and other office services.
Read More - Current Price
- $435.15
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 32 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $494.72 (13.7% Upside)
#5 - Meta Platforms (NASDAQ:META)
Meta Platforms Inc. (NASDAQ: META) has all the ingredients in place to be an AI juggernaut. That means the company has a significant amount of first-party data that it can use to program its own large language model (LLM), Llama. It also has managed to acquire a significant amount of NVIDIA’s H100 GPUs to handle the processing speed. And it’s in the process of designing its own chip.
The 12-month META stock chart (ending August 20, 2024) shows a bullish pattern. Perhaps nothing better reflected the bullish sentiment than the price action around earnings. META stock spiked approximately 11% higher after earnings but gave up all those gains and more in subsequent days over concerns of increased spending. However, the stock has since recovered those losses and has pushed higher.
That said, the stock is finding resistance at its 52-week and all-time highs. However, analysts believe that Meta will break through this level, and some believe it will do so significantly. In fact, Meta has been mentioned among stocks that are primed for a stock split.
About Meta Platforms
Meta Platforms, Inc engages in the development of products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide. It operates in two segments, Family of Apps and Reality Labs. The Family of Apps segment offers Facebook, which enables people to share, discuss, discover, and connect with interests; Instagram, a community for sharing photos, videos, and private messages, as well as feed, stories, reels, video, live, and shops; Messenger, a messaging application for people to connect with friends, family, communities, and businesses across platforms and devices through text, audio, and video calls; and WhatsApp, a messaging application that is used by people and businesses to communicate and transact privately.
Read More - Current Price
- $536.32
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 36 Buy Ratings, 2 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $577.26 (7.6% Upside)
#6 - Amazon.com (NASDAQ:AMZN)
Before AI became the cool kid on the block, Amazon.com Inc. (NASDAQ: AMZN) was already using AI in many ways, including its Alexa assistant. But consumers first became familiar with the company’s AI in the “you might also like” feature.
The bottom line for prospective investors is that the company was an early adopter of AI and continues to showcase AI in many ways throughout its vast ecosystem, including designing two of its own chips.
AMZN stock dropped sharply after a slight revenue miss in its earnings report, but investors have already gobbled up most of that dip, and the stock is within 10% of its pre-earnings price. The stock is also now trading around 37x forward earnings, which seems like a proper valuation for a stock that was trading around 53x forward earnings not long ago.
Furthermore, the Amazon analyst forecasts on MarketBeat give a consensus price of $221.69 which is 23% higher than its closing price on August 20, 2024.
About Amazon.com
Amazon.com, Inc engages in the retail sale of consumer products, advertising, and subscriptions service through online and physical stores in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS). It also manufactures and sells electronic devices, including Kindle, Fire tablets, Fire TVs, Echo, Ring, Blink, and eero; and develops and produces media content.
Read More - Current Price
- $186.88
- Consensus Rating
- Buy
- Ratings Breakdown
- 41 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $222.49 (19.1% Upside)
#7 - Palantir (NYSE:PLTR)
The last company on this list of AI stocks to buy for the long haul is the software company Palantir Technologies Inc. (NYSE: PLTR). Palantir’s proprietary ontology helps consumers use AI to make insightful decisions about their business.
PLTR stock is up approximately 88% in 2024. However, with a forward P/E of over 167x, many analysts believe the stock is simply too overvalued.
But you don’t have to pay that close attention to notice that Palantir is stacking win upon win. And the recent news that the U.S. government is going to expand its TITAN contract could be worth up to $1.5 billion. Now, Palantir won’t get all of this money, but it just goes to show that analysts may not be accounting for the future growth available for Palantir.
One more thing for investors to consider is that Palantir may be included in the S&P 500 index in September. That won’t shake out the retail investors who have driven the growth in PLTR stock. But as fund managers add the stock to their index funds, it’s likely to make today’s consensus price targets look far too low.
About Palantir Technologies
Palantir Technologies Inc builds and deploys software platforms for the intelligence community to assist in counterterrorism investigations and operations in the United States, the United Kingdom, and internationally. The company provides Palantir Gotham, a software platform which enables users to identify patterns hidden deep within datasets, ranging from signals intelligence sources to reports from confidential informants, as well as facilitates the handoff between analysts and operational users, helping operators plan and execute real-world responses to threats that have been identified within the platform.
Read More - Current Price
- $36.45
- Consensus Rating
- Reduce
- Ratings Breakdown
- 4 Buy Ratings, 7 Hold Ratings, 5 Sell Ratings.
- Consensus Price Target
- $26.79 (26.5% Downside)
Artificial intelligence can be intimidating and even a scary thought for some investors. It's not just about adapting to change, but adapting to the speed of that change. And many bearish investors may choose to believe that AI is a fad like some said of the internet in the late 1990s. But fortunes were made then by individuals willing to invest in companies like Apple Inc. (NASDAQ: AAPL) and Alphabet (NASDAQ: GOOGL), which were low-priced small-cap stocks at that time.
As with the internet, the growth of AI will come in ways that we may have difficulty imagining right now. But these companies are building that future which will come whether we want it or not.
One way that investors may want to approach this sector is through an exchange-traded fund (ETF) such as the iShares Robotics and Artificial Intelligence Multisector ETF (NYSARCA: IRBO). This fund has a low expense ratio of just 0.47% and gives you exposure to the entire AI value chain.
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