Do you have $500? 2 Monster Artificial Intelligence (AI) stocks to buy right now

Buying and holding top stocks for a long, long time is one of the best ways to make money in the stock market because this strategy allows investors to capitalize on secular growth trends and also helps them benefit from the power of composition.

For example, an investment of $500 made in Nasdaq-100 Technology Sector A decade ago, the index is now worth $2,300, which translates to a 16% annual increase over that period. So if you have $500 to spare right now, after paying your bills, paying off expensive loans, and saving enough for tough times, it would be a good idea to put that money into stocks of companies that benefit greatly from growth . adoption of artificial intelligence (AI).

This is because the global artificial intelligence market is expected to grow at an annual rate of 28% until 2030, generating annual revenues of nearly $827 billion at the end of the decade. Adoption of this technology will impact multiple industries, from cloud computing to digital advertising.

In this article, I’ll examine the perspectives of two companies that operate in these niches and are already benefiting from the rapidly growing adoption of AI to see why it would make sense to invest $500 in them (either separately or combined).

1. Trade office

Trade office (NASDAQ: TTD) operates a cloud-based programmatic advertising platform that helps advertisers buy ad inventory and manage and optimize their campaigns across channels such as video, mobile, e-commerce, connected TV and more . The Commerce Bureau’s automated platform uses real-time data to help advertisers generate higher ROI so they can buy and show the right ads to the right audience at the right time.

It’s worth noting that the company operates in a fast-growing niche, as the programmatic advertising market is expected to generate $725 billion in incremental revenue between 2023 and 2028, at a compound annual growth rate of 39%, according to TechNavio. The trade office relied on artificial intelligence to capture this massive end market opportunity.

The company launched its AI-enabled programmatic ad platform Kokai in June 2023. Kokai analyzes 13 million ad impressions every second so it can “help advertisers buy the right ad impressions, at the right price, to reach the target audience at the best time. .” The bright side is that The Trade Desk’s clients are already seeing an improvement in their return on ad spend thanks to Kokai.

On its August earnings conference call, The Trade Desk’s management pointed out:

The story continues

Solimar is The Trade Desk’s programmatic ad platform, which launched in 2021. So it won’t be surprising to see more of the company’s clients moving to Kokai with AI given the significant improvement in ad performance it offers. More importantly, The Trade Desk’s focus on integrating AI has allowed it to accelerate its growth as well.

The company’s revenue in the second quarter of 2024 rose 26% year-over-year to $585 million, compared with 23% growth in the same quarter last year. Its adjusted earnings rose at a faster pace of 39% year-over-year to $0.39 per share. The company’s forecast of $618 million in Q3 revenue would translate to a 27% increase over the same quarter last year, suggesting its top-line growth is on track to accelerate in the current quarter.

On the bright side, analysts expect The Trade Desk’s earnings growth rate to increase in the future.

TTD EPS estimates for current fiscal year data by YCharts

The company is expected to post an annual earnings growth rate of 26% over the next five years, but recent trends and the huge opportunity available in the programmatic advertising market (which The Trade Desk management pegs at $1 trillion) suggest that could exceed the consensus. estimates.

The market has so far rewarded The Trade Desk shares with 50% gains in 2024 thanks to its improved growth profile, and its bright outlook suggests it could continue to fly higher. That’s why investing $500 in The Trade Desk could prove to be a smart long-term move right now given that it has a price-to-earnings-growth ratio (PEG ratio) of 0.6, which it means it is undervalued relative to the growth it is expected to produce.

2. Oracle

The cloud computing market was a big beneficiary of the growing adoption of AI in the early days, with Grand View Research predicting that the cloud AI market could grow at an annual rate of 40% by 2030 to generate $647 billion in revenue by the end of the period of forecasting. Oracle (NYSE: ORCL) is getting a big boost from the rapid growth of the cloud AI market, as shown by the company’s recent results.

Oracle’s cloud revenue in the first quarter of fiscal 2025 (which ended Aug. 31) rose 21 percent year over year to $5.6 billion, outpacing the company’s overall revenue growth of 8 percent to 13 .3 billion USD. Specifically, the Oracle Cloud Infrastructure (OCI) business saw a tremendous year-over-year growth of 45% to $2.2 billion.

OCI is the company’s infrastructure-as-a-service (IaaS) business that rents out its cloud infrastructure to customers who want to train AI models. Management points out that this business now has an annual revenue run rate of $8.6 billion, and demand for OCI is outstripping supply. Demand for Oracle’s cloud infrastructure offering is so strong that remaining performance obligations (RPOs) rose 52% year over year in the previous quarter to $99 billion.

RPO is the total value of a company’s future contracts yet to be fulfilled, and it’s worth noting that AI plays a central role in increasing this value. Oracle points out that “its cloud RPO has grown by more than 80% and now accounts for nearly three-quarters of its total RPO.”

Given the huge opportunity that is present in the cloud AI market, it will not be surprising to see demand for Oracle’s cloud infrastructure grow at a robust pace for a long time to come. It’s also why consensus estimates predict Oracle’s revenue will grow by double digits over the next three fiscal years, after growing just 6% in fiscal 2024 to $53 billion.

ORCL Revenue Estimates for Current Fiscal Year Data by YCharts

Oracle is up 57% so far in 2024. Investors would do well to act quickly to add this cloud stock to their portfolios, as it still trades at an attractive forward earnings of 27 times, a slight discount to the multiple forward earnings of the Nasdaq-100 index. of 29. Its huge addressable market and huge backlog size, which is growing due to rapid adoption of cloud AI services, will likely lead to an increase in the share price in the future.

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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle and The Trade Desk. The Motley Fool has a disclosure policy.

Do you have $500? 2 Monster Artificial Intelligence (AI) Stocks to Buy Right Now was originally published by The Motley Fool