3 AI Stocks to Purchase and Hold with $1,000

3 AI Stocks to Purchase and Hold with ,000

The longer you hold quality inventory, the less important the initial price you paid. That’s not to say valuation doesn’t matter, but prolonged growth goes a long way toward mitigating the premium you might have paid. For investors looking for artificial intelligence (AI) stocks they can trust with their hard-earned money, getting the choices the law must come first.

If AI truly represents a multi-billion dollar economic opportunity, as researchers believe, Snowflake (NYSE: SNOW), Arm holds (NASDAQ:ARM)And Palantir Technologies (NYSE:PLTR) could crush the market for years and decades and their prices no longer matter as much.

Here’s a closer look at the three stocks. Be warned: none of these stocks have cheap valuations today. However, slow buying over time and strong performance of the underlying companies can take care of your portfolio. The best part is that you can buy multiple stocks of all three for less than $1,000.

1. Snowflake

Investors have gone a little crazy for semiconductor stocks lately. Yes, the chips power the data centers that run the AI, but the artificial intelligence technology is only as good as the data it is trained on. Just think about all the data a business can have: customer data, internal operational data, and financial data, across countless spreadsheets. This is where Snowflake comes in.

The company’s platform stores data in the cloud, which can be easily searched, shared and integrated with various third-party applications. It works on all major public clouds like Microsoft Azure, Amazon Web Services (AWS) and Alphabet‘s Google Cloud and fees are based on usage, so the price is always based on customer needs. More data and more customers over time means more growth for Snowflake.

3 AI Stocks to Purchase and Hold with ,000

SNOW (TTM) Earnings Chart

Snowflake could become a central platform for thousands of companies to use and exchange data in an industry where AI is a priority. The company recently named a new CEO, Sridhar Ramaswamy, who previously led Snowflake’s AI unit.

This should tell you where the company’s strategic direction lies. THE the future looks bright for the company and its shareholders.

2. Arm holds

Chip manufacturing starts with design and mastering the fundamentals of different designs, and Arm Holdings is a titan in chip design. The company earns licensing fees and royalties on its designs and intellectual property.

Arm management estimates that nearly half of the world’s chips use Arm designs. That makes Arm a profitable, asset-light company, poised to grow as an increasingly tech-driven world uses more and more chips.

How much more? Arm was founded in 1990 and since then, more than 280 billion chips have been built based on its intellectual property. That includes more than 30 billion chips in Arm’s most recent fiscal year, or more than 10% of its chips in the past year alone. In other words, demand for chips is growing exponentially and could generate substantial growth for years.

ARM Earnings Chart (TTM)ARM Earnings Chart (TTM)

ARM Earnings Chart (TTM)

The company already converts 26% of its revenue into free cash flow, and has $2.4 billion in cash and no debt. I expect possible share buybacks to boost earnings growth. The company looks like a future stock cannibal, devouring its shares (through buybacks) to increase investment returns.

Arm is a staple in the chip world, making it a stock you can hold onto indefinitely. The valuation is very high today, so investors might want to wait for a pullback before buying too aggressively.

3. Palantir Technologies

There are so many software companies on Wall Street that it can be difficult to find the exceptional ones. But Palantir Technologies seems to fit the bill.

The company operates platforms for building and deploying custom software applications for business and government. This is what it has traditionally done with its Gotham and Foundry platforms, but its new Artificial Intelligence Platform (AIP) is geared towards AI applications.

Revenue growth has accelerated since AIP launched in the middle of last year, and CEO Alex Karp said in the latest letter to shareholders that it represents the future of the company.

Financially, Palantir generates cash flow, converting 31% of its revenue into free cash flow. The company also has a war chest of $3.6 billion against zero debt.

PLTR Earnings Chart (TTM)PLTR Earnings Chart (TTM)

PLTR Earnings Chart (TTM)

And it may just be beginning. The company has only 497 customers, while tens of thousands of businesses in the United States and around the world may need AI to compete in the future.

Palantir’s stock was a bit more speculative when it went public due to the secretive nature of its ties to the government, from which it derives about half of its revenue. But its commercial momentum could give investors confidence that its success will have a positive impact on the private sector in the years to come.

Want to invest? Here is your playbook

These three stocks offer attractive long-term potential, but also come with high valuations. Each has a high forward price-to-earnings ratio, ranging from 70 to 170 times earnings. Even though earnings are expected to grow quickly for all three companies, this still represents a sizable premium to the market as a whole. THE S&P500 trades at just 21 times earnings.

SNOW PE Ratio Chart (Forward)SNOW PE Ratio Chart (Forward)

SNOW PE Ratio Chart (Forward)

If you want to buy, consider phasing into dollar-cost averaging to have some cash left over if the market offers them at lower prices. Buy slowly, hold for a long time and investors should be happy with the results.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Justin Pope has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Alphabet, Amazon, Microsoft, Palantir Technologies and Snowflake. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

3 Artificial Intelligence (AI) Stocks You Can Buy with $1,000 and Hold was originally published by The Motley Fool

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