Three Smart AI Stocks to Invest $200 In Right Now

The realm of artificial intelligence (AI) has been a dominant force in the market, continuing to attract substantial attention and investment. With the potential for significant growth, several companies still offer promising value. Investing in AI stocks can provide opportunities for those looking to enter the market with a modest sum, like $200.

Market researchers at IDC project that businesses will invest a remarkable $307 billion on AI solutions in the current year, with expectations for that amount to exceed $632 billion by 2028. However, not every company will emerge as a winner from this spending spree. Even if a company shows promise, it must also offer attractive stock values amidst rising share prices.

For investors willing to invest $200, here are three standout AI stocks considered smart purchases right now.

1. Alphabet

Alphabet (GOOG) is the parent company of Google, and it’s making significant investments in AI technology, planning to spend around $75 billion on infrastructure in 2025 alone. This move highlights the company's commitment to AI, having started to integrate AI-generated responses in its search engine as early as 2023. By the end of 2024, AI features had expanded to over 100 countries, increasing user satisfaction and engagement without negatively impacting its advertising revenue.

Additionally, AI is enhancing products like Google Lens and contributing to advertising innovations. The Google Cloud segment has also seen revenue growth of 30% last year, and management anticipates further expansion as the cloud sector flourishes.

Despite heavy investments, Alphabet has reported strong returns, with earnings per share rising 39% last year. Analysts project an additional 12% growth for the current year. At a trading price of around $170, the stock appears to be trading at a low valuation compared to expected future earnings, making it an attractive choice for those seeking AI investments.

2. Applied Materials

Applied Materials (AMAT) is a leader in manufacturing the sophisticated equipment needed for high-end AI chips. With a diverse range of offerings, Applied Materials stands out in a competitive market. As demand for chip production continues to increase, the company is well-positioned to capture significant business from it.

The company's success is supported by a cycle where foundries prefer to work with Applied due to its superior equipment and the high costs associated with switching providers. Applied also invests heavily in research and development—expecting to spend $3.2 billion in 2024 alone—to innovate and improve its offerings further.

Apart from manufacturing, Applied Materials has a lucrative service business supporting its equipment, which is expected to grow alongside rising complexities in chip production. Trading at around $158 per share, the stock offers a low price-to-earnings ratio, making it a compelling buy for investors, especially those starting out in the AI space.

3. Advanced Micro Devices

Advanced Micro Devices (AMD) is often viewed as a secondary player to Nvidia in the AI chip market, particularly when it comes to GPUs for AI. Despite recent forecasts indicating possible revenue drops, it’s essential to recognize that AMD maintains a significant role in the semiconductor market.

Management has identified a vast opportunity in AI, estimating that the market for AI accelerator chips could exceed $500 billion by 2028. Even capturing a fraction of this market would significantly boost AMD's revenue, which already stands at $12.6 billion from its data center segment.

A key strength for AMD lies in its capacity to improve profit margins. The company has successfully increased its gross margin recently, indicating a positive trend. With current share prices around $100, investors can purchase two shares with a $200 investment. Analysts anticipate strong earnings growth from the company in the coming years, which could justify a higher valuation in the future.

For those looking to enter the AI market, these three stocks represent viable investments that leverage the growing trend in artificial intelligence.

AI, Stocks, Investing