The past two years have kept investors on the edge of their seats. In 2022, the three major indexes slipped into bear territory, then rebounded in 2023 as growth stocks soared. But it wasn’t until about a month ago that the S&P 500 hit a new all-time high, confirming a bull market has indeed arrived.
The bull market didn’t just start and instead has been in action ever since stocks began recovering from their bear market lows. Bull markets always are declared well after they’ve begun, but since they generally last for years, there’s still plenty of time for investors to benefit. And one of the best ways is to invest in stocks linked to growth as they often thrive in bull environments.
You can find plenty of great possibilities in one of today’s fastest growing markets, artificial intelligence (AI). The global AI market is forecast to grow in the double digits this decade to possibly reach beyond $1 trillion by 2030. Three stocks in particular may come out on top in this technology that could revolutionize everything from business to daily life. Here are my monster AI growth stocks to buy hand over fist in the new bull market.
Amazon (AMZN 2.71%) is making AI top priority at its cloud computing business, Amazon Web Services (AWS). The cloud business is addressing all three “layers” of AI. This includes offering AI chips to companies building their own large language models (LLMs), offering a fully managed selection of existing LLMs to be customized for those that don’t want to build their own, and offering applications such as the company’s new AI powered assistant.
The strategy makes AWS the “go-to” destination for clients looking to incorporate AI into their businesses. And since AWS already is the global cloud market leader, customers already are there — AWS just has to serve them the right mix of products and services.
Amazon predicts generative AI will result in tens of billions of dollars in revenue for the company in the coming years. AWS already has been Amazon’s main profit driver, so the future definitely looks bright for this business unit.
Today, Amazon shares trade for 41x forward earnings estimates, down from 56 just a few months ago, representing a solid buying opportunity for this top growth stock.
Nvidia (NVDA 3.58%) originally was a giant in the world of gaming, selling graphics processing units (GPUs) that produced the brilliant images and action gamers love. But in recent years, it became clear that GPUs could serve many other areas thanks to their ability to process multiple tasks at the same time. And that’s how GPUs became integral to AI, where high speed is a must.
Today, Nvidia’s chips dominate the AI market, with a more than 80% share, and this leadership has helped the company’s earnings take off. In the most recent quarter, revenue increased in the triple digits, and net income climbed more than 1,000%.
But Nvidia’s success doesn’t look like a one-time deal, and instead, this momentum could continue thanks to the high demand in the AI market — and considering Nvidia’s leadership and investment in research and development.
Right now, Nvidia shares, in spite of soaring 200% over the past year, trade for only 33x forward earnings estimates, an absolute steal for this company powering the AI era.
3. Palantir Technologies
Palantir Technologies (PLTR -0.53%), like Nvidia, didn’t start out as an AI giant in the commercial space. Instead, for years the software as a service company was known for serving governments. Palantir is an expert at aggregating vast collections of data and analyzing this data to draw conclusions that could be crucial to a particular client’s operations.
Just last year, Palantir launched its Artificial Intelligence Platform (AIP), which helps its clients use generative AI and their own data to make better decisions and improve processes. The company paired this with AI Bootcamps or sessions to introduce potential clients to the service.
The efforts have worked. Palantir CEO Alex Karp wrote in the recent shareholder letter that AIP is “significantly contributing” to revenue and increasing customer numbers.
Importantly, AI is helping Palantir to make great gains in the commercial market, making it less dependent on government contracts. In the most recent quarter, U.S. commercial revenue surged 70%, and U.S. commercial customer count climbed 55%.
At 73x forward earnings estimates, Palantir stock may look pricey, but considering the company is in the very early days of its AI story, I expect a lot more earnings growth to come. And that means the stock still represents a great one to buy hand over fist now — and hold onto for the long term.
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.