Key Points
Don’t look now, but the Nasdaq once again hit an all-time high this month. That seemed very unlikely at the end of March with the index in correction territory, but leading tech and artificial intelligence (AI) stocks have come roaring back.
Anytime it looks like the market is set to write off the AI trade, the stocks have bounced back. That speaks to the power of what looks to be an enduring trend that is still in its early innings. Let’s look at three AI stocks to buy now.
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Nvidia: More than making GPUs
Nvidia (NASDAQ: NVDA) remains the company at the center of the AI infrastructure build-out. While its graphics processing units (GPUs) are still the main chips powering AI workloads, what is most exciting about the stock is how the company has been evolving. Nvidia is no longer just a GPU company, but an end-to-end AI infrastructure provider. In fact, the fastest-growing part of its business lately has been data center networking.
Meanwhile, its chip business is more than just GPUs; it now offers central processing units (CPUs), data processing units (DPUs), and, most recently, through its purchase of most of Groq’s technology assets, language processing units (LPUs) that are designed specifically for inference. This now allows it to offer complete server rack solutions configured to handle specific AI workloads, such as training, inference, agentic AI, and AI-native storage. This positions the company to be a winner as the AI also evolves.
Image source: Getty Images.
Alphabet: The total AI package
When it comes to AI, Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) is, quite frankly, the whole package. It has the hardware, the cloud computing network, a foundational AI model, a top data center cybersecurity offering, and the distribution to be one of the biggest winners in the space.
Its biggest edge comes from its tensor processing units (TPUs), the custom chips it designed over a decade ago and optimized its entire hardware and software stack around. It just introduced the eighth iteration of these chips with impressive specs, while deciding to make two versions: one for training and one for inference. It has also developed its own custom central processing units (CPUs), which positions it well for agentic AI.
This gives it a cost advantage, enabling it to train its Gemini model more cheaply than competitors, which then feeds into its core search and AI discovery business. This business itself has a big moat through its distribution edge, which comes from owning Chrome, Android, and its search revenue-sharing deal with Apple. It also has a massive ad network that lets it better monetize AI on the consumer side than competitors.
Alphabet just has too many AI advantages to not be in your portfolio.
Meta Platforms: The AI flywheel
Few companies have been able to use the power of AI to drive growth at their core business better than Meta Platforms (NASDAQ: META). The company’s social media assets are the ideal AI flywheel, enabling it to use AI to keep users on its sites longer by serving them more of the content they are interested in. This allows it to serve its users not only more ads, but also more relevant ads based on their actions across Meta’s entire platform. This combination leads to both higher ad impressions and higher ad prices, since it increases conversions.
Meta has smartly pulled back on its money-draining metaverse ambitions and is now directing more money toward AI and AI infrastructure. The company uses a broad range of chips, including GPUs and TPUs, and has also recently introduced its own custom AI chips. In a world fighting for more access to more computing power, this is a smart move, and a gradual transition to its own chips could eventually help it run its AI workloads more cheaply and efficiently.
Throw in the company just starting to serve ads on its popular WhatsApp messaging platform and new social media platform Threads, and Meta has plenty of growth ahead.
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Geoffrey Seiler has positions in Alphabet and Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Apple, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
