These two Dow stocks are set to rise in 2024 and beyond

The Dow Jones Industrial Average tracks the performance of 30 blue chip stocks. The index has returned 10% year-to-date, but companies making big splashes in artificial intelligence (AI) could do much better over the next year and beyond.

Here are two Dow stocks to buy right now.

1. Amazon

Amazon (AMZN 1.08%) the stock has produced returns that have generated wealth for shareholders over the past few decades, and is currently up 22% in 2024. Amazon still has plenty of growth opportunities in retail and enterprise cloud services to power the stock higher.

Amazon’s expansion of same-day delivery and increasing selection of items will be important advantages in capturing an increasing share of the global e-commerce market. Data and information platform Statista predicts that online retail spending will exceed $8 trillion by 2027.

What makes the stock particularly attractive right now is the company’s growing profit margin. Operating income nearly doubled in the second quarter from the year-ago quarter, and there are still several opportunities to further improve retail margins, including lowering shipping costs by approaching customers with multiple delivery facilities in the same day.

Meanwhile, Amazon’s cloud services business, which generates two-thirds of the company’s operating income, shows even greater growth potential. Companies are migrating their data from on-premises servers to Amazon Web Services to take advantage of tools like Amazon Bedrock, which help companies build their own AI applications. Amazon also offers custom AI chips that offer better performance for the price than higher-priced chips from the leading hardware vendor Nvidia. These are some of the reasons why AWS revenue growth accelerated in Q2, up 19% from the year-ago quarter.

Opportunities in online commerce and cloud services are excellent reasons to consider buying Amazon stock in 2024. Analysts expect Amazon’s earnings to grow at double-digit rates in the coming years, pointing to several new highs for the stock.

2. Apple

A significant driver of economic growth will be the AI ​​market. AI software will simplify tasks and help people find what they need much faster, which could lead to significant increases in productivity. There is no consumer brand better positioned to benefit from this trend than Apple (AAPL 0.22%).

The iPhone is an essential device that people check as soon as they wake up in the morning. With more than 2.2 billion active devices, Apple will be the face of artificial intelligence for millions of people, which is why the stock is rising this year in anticipation of the upcoming release of Apple Intelligence.

Apple Intelligence will begin rolling out to US users as a free update next month. The opportunity for Apple is that Apple Intelligence requires devices with newer and later generation M1 processors. This provides a natural incentive for users to upgrade to the new iPhone 16.

City GroupIts internal research shows that customers who pre-order the new iPhones are choosing to go for the premium Pro Max model. That bodes well for Apple’s margins, which have already grown in recent years due to growth in paid subscriptions and other offerings as part of its services segment.

IDC expects smartphone shipments with generative AI features to grow 364% in 2024 to 234 million. By 2028, this figure is expected to reach 912 million. Apple Intelligence will help the company further distinguish its brand, which could lead to increased market share, an increase in its installed base of devices, and greater demand for high-margin services.

Analysts expect Apple’s earnings to grow 17% in fiscal 2024 (ending September) and 11% next year. Apple should be able to sustain double-digit earnings growth for a few more years and deliver superior returns to investors.