Got $3,000? 2 Artificial Intelligence Stocks to Buy and Hold for the Long Term

Artificial intelligence (AI) is a term that has gained immense attention in recent years. Although AI has been around for decades, the rise of generative AI tools like ChatGPT and Google's Gemini has propelled it into the spotlight.

Many technology companies are now eager to incorporate AI into their products and services; however, not all will thrive in this evolving landscape. Here we highlight two companies that stand out as key players in the AI space.

If you have $3,000 available for investment after covering your basic needs, consider putting $1,500 into each of these leading AI stocks. This approach will provide you with exposure to two innovative companies harnessing the potential of AI in remarkable ways.

1. Alphabet

Alphabet (GOOG) is a significant contributor to AI advancements, thanks to its research initiatives and infrastructure. Its subsidiary, DeepMind, may not be as widely recognized as Google or YouTube, but it has been responsible for notable progress in AI technologies over the years.

Alphabet's backbone is its Google Search service, which generates the majority of its revenue. However, there are concerns that the inclusion of AI features might reduce the number of users clicking on ads, as AI can provide answers directly without requiring users to visit a webpage. In Q4 2024, Google Search generated $54 billion, showing a 13% year-over-year growth, accounting for 56% of Alphabet's total revenue. This raises questions about potential revenue cannibalization.

Despite these concerns, the advantages of AI integration far outweigh the risks for Alphabet. For one, the company has adopted a vertical approach to AI, managing everything from research to infrastructure, training, and application in-house. This sets it apart from many other large tech companies that depend on third parties, enhancing its flexibility and control.

Additionally, Alphabet's cloud sector, Google Cloud, stands to gain significantly from AI advancements. As the third-largest cloud provider globally, it has plenty of room to grow within the rapidly expanding cloud market.

After experiencing a price decline of over 11% this year up until March 24, Alphabet's shares now present an appealing investment opportunity. While short-term fluctuations are uncertain, the company is poised for long-term success.

2. CrowdStrike

CrowdStrike (CRWD) is at the forefront of the cybersecurity industry, which has become crucial in today's digital landscape. As a pioneer of AI-powered cybersecurity solutions, CrowdStrike has distinguished itself since launching its Falcon platform in 2011, moving away from traditional, on-premises security solutions to a purely cloud-based AI approach.

Although the company faced challenges over the past nine months, including a significant IT outage in July 2024, its cybersecurity offerings have garnered a broad customer base. Notably, it serves as the preferred cloud security platform for more than 60% of the Fortune 100 companies.

This growing customer acceptance is reflected in CrowdStrike's financial performance. The company reported an annual recurring revenue (ARR) increase of 23% year over year, reaching $4.24 billion, with a free cash flow of $1.07 billion. These figures underscore the effectiveness of its subscription-based business model that allows clients to select tailored solutions.

CrowdStrike estimates its total addressable market for AI solutions is around $116 billion, with projections of expansion to $250 billion by 2029, showcasing a compound annual growth rate exceeding 20%.

A significant advantage for CrowdStrike in the AI domain is its first-mover status. To optimize AI efficiency, it relies on vast amounts of training data, which CrowdStrike has been collecting for an extended period, ahead of many competitors.

With cybersecurity's relevance expected to persist, CrowdStrike remains a robust investment option that is well-positioned for long-term growth.

Note: The opinions expressed in this article are for informational purposes only and do not constitute investment advice.

AI, Investing, Stocks