Top detection artificial intelligence (AI) stocks are not a simple endeavor right now. Many AI stocks have risen on the back of the release of a significantly improved version of ChatGPT. Nvidia: and: Get dressed A lot of growth has been experienced in a short period of time.
Those gains may have investors wondering what to buy now. Fortunately, even if finding the “best” AI stocks is elusive, we can assume that AI is likely to deliver gains in stocks for years to come, meaning investors are open to In the current environment, these two stocks are likely to become AI leaders and bring significant profits to their shareholders.
Amid AI-driven gains in many stocks, investors seem to have forgotten about it Qualcomm: (NASDAQ: QCOM). Indeed, the smartphone chipset leader has suffered as the 5G upgrade cycle has run its course.
In addition, Apple: It has been working for years to develop a 5G modem chipset that can power its iPhone.After years of throwing in the towel and extending its contract with Qualcomm, Apple appears ready to end the supply agreement after 2026.
However, Qualcomm has advanced AI in its chipsets, starting with the Snapdragon 8 Gen 3. That and the upcoming Snapdragon 8 Gen 4 could lead to another round of upgrades.
Moreover, Qualcomm has been preparing for years for the day when smartphone chipsets will become a less reliable source of income. To that end, he has built businesses in the Internet of Things, the automotive industry and, more recently, entered the computer business.
These moves helped growth turn positive again, as revenue of $39 billion in fiscal 2024 (ended Sept. 29) rose 9% over the prior year. that fiscal year net income of $10 billion will grow by 40 percent annually.
So far, analysts are forecasting revenue growth to remain in the 9% range for fiscal 2025. However, with the stock selling The P/E ratio At just 17, investors may be overreacting to its slow growth rate, especially given AMDA multiple of 109. Additionally, Apple is selling at 42 times earnings, and even its core maker, Taiwan Semiconductor Manufacturingtrades at a P/E ratio of 31. This means Qualcomm stock can only grow on multiple expansion.
Also, given that Qualcomm expects lost business from Apple, the company has factored that into its estimates for fiscal 2025. Such an assumption is likely to set up Qualcomm stock to surprise to the upside, meaning investors should is profitable as the company continues to grow.
Another tech company that is underrated for its AI is parent company Google The alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG). This may seem surprising for a company that has incorporated AI into its applications since 2001.
However, the emergence of ChatGPT presents Google Search with its most serious competitive threat in years.Also, the launch of its own generative AI product, Google Gemini, has not led to fears that the lost search business will hamper its profitable advertising business.
However, investors shouldn’t overlook Alphabet’s vast resources and innovations. It currently has a staggering $93 billion in liquidity, down from $111 billion at the end of 2023, but Google’s parent company is now funding a dividend and investing heavily in research and development. in, setting the stage for possible rebirth.
That investment includes not only artificial intelligence, but also spending on a technology that can supercharge AI: quantum computing.To that end, Alphabet just released its Willow quantum computing chip.
Quantum computing could redefine the computing industry. Instead of storing zeros or ones like traditional data bits, qubits or quantum bits, process zeros and ones at the same time, exponentially increasing computing speeds. which a traditional computer cannot do in the entire history of the universe.
In addition, Willow made progress in addressing the error-prone nature of quantum chips.Instead of increasing error rates as the number of qubits increases, Willow can reduce errors as the number of qubits grows.This solves a major obstacle to making quantum computing technology viable.
Plus, given all the concerns surrounding the company, Alphabet generated $62 billion in free cash flow in the first nine months of 2024 alone, giving the company significant flexibility to continue to innovate.
Furthermore, Alphabet’s P/E ratio of 25 gives it the lowest earnings multiple of any Magnificent Seven stock.That valuation is less likely to remain at that level as more investors recognize the company’s ability to outdo Google Search. from
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Susan Frey, CEO of Alphabet, is a member of The Motley Fool’s board of directors. Will Healy has positions in Advanced Micro Devices and Qualcomm The Motley Fool has positions in Advanced Micro Devices, Alphabet, Apple, Nvidia, Palantir Technologies, and Taiwan Semiconductor Manufacturing a disclosure policy.
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