The artificial intelligence (AI) market is heating up, and some have estimated that AI-powered services could reach a staggering value of $14 trillion by 2030. The technology’s capabilities are already integrated into many services, including cloud computing and online search, and the companies that are moving the fastest could be long-term winners.
Investors looking for top AI stocks to buy right now and hold for the next decade should take a close look at what Nvidia(NASDAQ: NVDA), Microsoft(NASDAQ: MSFT), and Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL) are doing. They will be impressed.
Nvidia is best known for its high-powered semiconductors used for video games, but its graphics processors are also a top choice for artificial intelligence processing.
The company’s GPUs have been used in AI servers for top tech companies for years, but with the recent release of OpenAI’s ChatGPT chatbot earlier this year, there could be far more demand for Nvidia’s GPUs ahead. AI processing takes enormous computing power, so faster and better GPU-powered servers will be built to keep up with all companies integrating AI into their software.
This demand will accelerate the AI semiconductor market, increasing it to an estimated market size of $228 billion by 2032, up more than 12 times from 2022. Already, CEO Jensen Huang has said that the company will have a “giant record year” thanks in part to AI semiconductor demand.
Huang told CNBC recently that generative AI is a “flashpoint” for the company’s growth. And this new demand caused the company to issue strong second-quarter revenue guidance of $11 billion, far higher than analysts’ average estimate of $7.1 billion.
With its leading position in the GPU-powered server market right now, Nvidia is poised to tap into the fast-growing AI semiconductor market. Nvidia was already a strong company and leading player in the semiconductor space, and now AI will be a catalyst for further growth.
Tech investors have likely been keeping a close eye on Microsoft lately ever since the company integrated ChatGPT into some of its core products. Microsoft now has the chatbot in its Bing search engine, its Microsoft 365 suite of productivity apps, and its Azure cloud computing services.
The company’s recent moves have raised some questions whether Microsoft’s Bing search could eventually replace Google. And while it’s far too early to know if it will, it’s clear that Microsoft believes ChatGPT is powerful enough to put at the forefront of many of its key products.
The tech giant could benefit in two ways from AI. First, there’s the broader AI-powered software market. Its Edge browser (which uses ChatGPT in its Bing search tool) has already seen a spike in demand since the AI integration. And adding the chatbot to its powerful Microsoft 365 apps will help ensure these legacy products stay relevant.
Second, the company’s Azure cloud computing services will likely grow because of increased demand for AI services. Microsoft has invested more than $10 billion in ChatGPT’s parent company, OpenAI,, and part of the benefit from that investment is that the tech giant is the exclusive cloud host for OpenAI.
Large tech companies have already released, or are releasing, AI services that will drive cloud computing demand higher. Microsoft is currently the No. 2 cloud computing company behind Amazon, making it a no-brainer for many companies looking for robust AI cloud computing services.
Google’s parent company, Alphabet, was seemingly caught flat-footed when Microsoft began integrating ChatGPT into its Bing search engine and software products. But Alphabet quickly responded and unveiled its own chatbot, called Bard, earlier this year.
Bard can perform tasks like drafting emails, answering complex search questions, and even writing code. And while Bard is still more in the testing phase than a full-fledged AI feature, the company could catch up in this space.
For one, Alphabet commands 88% of the online desktop search market worldwide, and that dominance will not easily be lost. Even if Alphabet loses some market share temporarily, the next release of Bard could prove to be much more powerful and help Alphabet hold on to its leading search position.
And Alphabet has been using AI to determine which ads to serve up to online users for years, helping to achieve 27% of the digital ad market in the U.S. As with its dominance in search, this ad lead won’t easily fade away. Google has already begun implementing AI into its ad business, allowing advertisers to create campaigns using artificial intelligence.
Lastly, investors should remember that Alphabet’s Google Cloud service will also benefit from AI demand. It’s Alphabet’s fastest-growing revenue segment, and 60% of the world’s 1,000 largest companies use it. Rising AI demand could bring even more growth from Google’s cloud business as these companies look to beef up their own services in the years ahead.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.