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3 Of the Best Ways to Gain Long-Term Exposure to AI

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  • These three AI stocks certainly look like the best ways to play this long-term catalyst for bullish investors. 
  • Microsoft (MSFT): The tech giant has experienced a 33% surge this year, benefiting from its AI infrastructure.
  • Alphabet (GOOG): Alphabet has the potential for long-term growth as the company integrates ChatGPT with Bing.
  • Tesla (TSLA): During Tesla’s recent annual meeting, CEO Elon Musk dropped hints about upcoming products in the pipeline.
best ways to invest in AI - 3 Of the Best Ways to Gain Long-Term Exposure to AI

Source: shutterstock.com/everything possible

Artificial intelligence is currently the most sought-after trend in technology. So, we want to look at some of the best ways to invest in AI now. In the past, AI was often linked to futuristic concepts of creating intelligent entities. However, until recently, the general consumer had limited exposure to advanced AI technologies. Chatbots, for example, lacked sophistication and struggled to deliver comprehensive responses. 

With the rise of various generative AI models, things are starting to change. With millions of users trying out ChatGPT and other large language models, AI has become more mainstream than ever. Accordingly, with the benefits becoming clearer to the average person, investors are jumping aboard. But how should investors play this long-term catalyst? Let’s dive into three of the best ways to invest in AI now.

MSFT Microsoft $332.89
GOOG GOOGL Alphabet $125.43
TSLA Tesla $193.17

Best Ways to Invest in AI: Microsoft (MSFT)

Graphic of letters "AI" in bold font surrounded by circle of tech symbols in purple and blue against a dark background
Source: shutterstock.com/Tex vector

Microsoft (NASDAQ:MSFT) remains at the forefront of the tech industry and AI advancement. This has been demonstrated by its massive investment in OpenAI’s ChatGPT and the introduction of AI-powered search features.

AI’s influence extends across various sectors of Microsoft’s business, with a notable emphasis on its intelligent cloud segment. This segment encompasses Azure, the company’s cloud-computing platform, and other cloud services that form the foundation for AI-driven computing, generating significant revenue.

Investors can find reassurance in the fact that Microsoft’s intelligent cloud business is already well-established and thriving. In the company’s fiscal third quarter, revenue from this segment surged by 16%, surpassing the overall revenue growth rate of 7%. This strong performance indicates that investors can capitalize on the segment’s momentum without having to wait for a surge in AI-driven demand.

Consider adding Microsoft to your investment portfolio as it stands to gain from the flourishing AI industry. Management anticipates a robust 15% to 16% YoY growth in this sector during the upcoming quarter. By investing in Microsoft, you tap into an already established business, eliminating the need to wait for the surge in AI-driven demand to reap the benefits.

Alphabet (GOOG, GOOGL)

Close-up of letters "AI" written on a computer chip, symbolizing artificial intelligence and AI stocks
Source: shutterstock.com/YAKOBCHUK V

Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) stock and valuation share a parallel trajectory with Microsoft’s, following similar catalysts and reaping similar benefits. The pandemic has strengthened both companies significantly, positioning them as formidable players in the market.

In fact, Alphabet is poised to become one of the future’s $10 trillion companies, with a remarkable scale of growth. Its value has surged by approximately $500 billion, reaching a valuation close to $1.6 trillion. Bank of America believes Alphabet stock has further upside potential due to Google’s strong position in the search engine market. With Google receiving 2.6-3 billion online web visits, compared to Bing’s 38.9 million and ChatGPT’s 62.4 million, Bank of America reiterated its “buy” rating and set a target price of $128 for Alphabet.

Despite the impressive number of downloads for ChatGPT’s new iOS app in the US, Bank of America downplayed its impact on Google’s dominance. The app garnered 710,000 downloads in three days, surpassing Google’s US app by 2.7 times.

Google’s data collection during the pandemic, fueled by the surge in search activity, is a significant advantage that will benefit the company for a long time. Additionally, Google’s recent release of its AI offerings signals the beginning of its journey toward a $5 trillion valuation. The potential of AI to accelerate this goal is comparable to how the pandemic expedited Alphabet’s growth.

Tesla (TSLA)

Illustration of hand pointing finger about to touch virtual "AI" graphic
Source: shutterstock.com/Den Rise

At Tesla’s (NADSAQ:TSLA) recent annual meeting, CEO Elon Musk teased the arrival of new Tesla products, expressed openness to advertising, and confirmed a Cybertruck delivery event scheduled for this year. This meeting followed Musk’s announcement of a new Twitter leader, assuring TSLA shareholders of his increased focus on the global EV company.

With his groundbreaking innovations and relentless drive, Musk has revolutionized the auto industry, compelling it to embrace the electric-vehicle revolution. This pivotal role has propelled Tesla to tremendous success, as evidenced by its remarkable stock performance from mid-2019 to late 2021. Although experiencing a dip to a bear market low of 101.84 on Jan. 6, the stock rallied strongly until the release of Q1 earnings.

Unlike past automotive ventures such as the DeLorean Motor Company, Tesla has successfully transitioned into the mainstream and is now synonymous with electric transportation. With its strong market presence, Tesla is positioned as a long-term player in the electric vehicle (EV) industry.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.


Article printed from InvestorPlace Media, https://investorplace.com/2023/05/3-of-the-best-ways-to-gain-long-term-exposure-to-ai-best-ways-to-invest-in-ai/.

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