Times have been tumultuous for investors recently. In 2022, the major indexes dipped into bear territory, but in 2023, growth stocks surged, signaling a rebound. It wasn’t until about a month ago that the S&P 500 reached a new all-time high, confirming the onset of a bull market.
Bull markets are declared well after they’ve begun, but they tend to last for years, presenting abundant opportunities for investors to thrive. One savvy sector to explore in the ongoing bull market is artificial intelligence (AI), which is poised to transform various aspects of business and daily life. Here are three AI powerhouse stocks worth considering in this new bull market.
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Amazon’s AI Drive
Amazon (NASDAQ: AMZN) is doubling down on AI at its cloud computing business, Amazon Web Services (AWS). AWS is catering to all three “layers” of AI, offering a range of innovative products and services to integrate AI into client businesses. With its existing market leadership in cloud computing, Amazon has a ripe opportunity to serve an expanding client base with its AI offerings.
Amazon anticipates substantial revenue from generative AI in the coming years. Given AWS’s track record as Amazon’s primary profit driver, the future looks promising for this venture. Despite a dip in forward earnings estimates, Amazon shares are trading at a favorable price point, making it an attractive growth stock.
Nvidia’s AI Dominance
Nvidia (NASDAQ: NVDA) initially gained renown in gaming for its graphics processing units (GPUs), but its GPUs found further application in AI due to their multitasking capabilities. With a market share of over 80% in AI, Nvidia’s earnings have soared, propelled by triple-digit revenue growth and a more than 1,000% increase in net income in the most recent quarter.
Nvidia’s momentum in the AI market is likely to persist, given the ever-growing demand and the company’s continued investment in research and development. Despite a 200% surge in the past year, Nvidia’s shares are trading at a considerable discount to forward earnings estimates, presenting a compelling investment opportunity.
Palantir Technologies’ AI Evolution
Palantir Technologies (NYSE: PLTR), best known for its government service, has ventured into the commercial AI space. The launch of its Artificial Intelligence Platform (AIP) has enabled clients to leverage generative AI and data for enhanced decision-making and process improvement. This strategic move has significantly contributed to revenue growth and a surge in commercial customer numbers.
AI has driven Palantir’s success in the commercial market, diminishing its reliance on government contracts. Despite its seemingly high forward earnings estimates, Palantir’s AI story is still in its infancy, offering substantial potential for earnings growth in the future.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.