The recent controversy around DeepSeek, a Chinese artificial intelligence company, has prompted investors to reconsider the AI landscape. It's a reminder that as dynamic and rapidly growing as the AI opportunity is, it will throw investors several curve balls over the coming years.
Investors who want to buy and hold AI stocks long-term must zoom out and consider where AI is today and where it might go.
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Here are three AI stocks with promising long-term potential. They have an inside track to AI leadership today as technology blossoms and finds its way into our daily lives. You can buy a share of each company for a total of just $1,000. Consider buying and holding them for the next decade.
DeepSeek's apparent ability to launch a lower-cost AI model raises valid questions about whether large language models ultimately become a commodity. In other words, the actual value lies in the ability to build specialized applications on top of generic AI models. In such a case, Palantir Technologies (NASDAQ: PLTR) is potentially an enormous long-term winner. The company builds and deploys custom AI software for government and enterprise clients. Its history dates back more than a decade, but the business has leaped forward since launching its AIP platform for enterprise clients in mid-2023.
Palantir helps companies deploy AI applications for various use cases. The software's flexibility is key because it makes almost any large enterprise a potential customer. Last year, Palantir generated $2.87 billion in (highly profitable) revenue despite only having 711 customers. There are a whopping 20,000 large corporations in the U.S. alone, and as AI matures and becomes increasingly cost-effective, Palantir could potentially move downstream, selling to medium and small businesses.
The company's success since 2023 has pushed the stock to an aggressive valuation, so investors shouldn't rush to take a position. Consider buying a share to get started and adding to it on declines. Palantir may take some time to grow into its current price, but it should still be a winner over the next decade.
No company is better positioned than Apple (NASDAQ: AAPL) to deliver AI technology at the consumer level. Its devices are already like personal computers in the palm of your hand, the perfect delivery mechanism for consumer AI. The smartphone giant has more than 2.35 billion active iOS devices worldwide, an enormous ecosystem with which it can quickly scale AI products and services. However, it's essential to consider just how young AI technology is. A few months back, Apple launched Apple Intelligence, a package of iOS AI features and tools for device users, and the early reception has been somewhat standoffish.
However, this doesn't mean user interest will not increase as AI becomes more commonplace (and features improve) over time. Ultimately, if AI is to realize its potential, it will likely need widespread adoption among everyday people. Otherwise, it will be much more challenging to justify the investments in building and developing it.
The company's growth has stalled in recent years, raising questions about Apple's valuation. That has intensified with Warren Buffett trimming Berkshire's position in the company. Again, a dollar-cost average strategy combined with a multiyear time horizon will help investors navigate the short-term uncertainty. Investors shouldn't dismiss Apple's iOS ecosystem's upside in delivering AI to individuals -- even if it takes time.
Social media behemoth Meta Platforms (NASDAQ: META) is leaning into AI as an opportunity to build businesses outside of the closed ecosystems Apple and Alphabet (Google) enjoy via their app stores and mobile phone dominance. For instance, Meta has developed and launched an open-source AI model (Llama) to build a large developer base. As of Q4, Meta's AI has more than 700 million monthly active users. Additionally, Meta is working to establish itself with new types of personal devices, such as smart glasses and headsets.
The key here is that Meta potentially has AI growth potential both in consumer-facing AI opportunities and on the enterprise side. That includes AI improving its core digital advertising business and new products and services, like AI agents that could replace human workers in call centers.
Meta has enjoyed a slingshot trajectory. The stock sank to less than $100 in 2022 when Apple enabled users to block apps from tracking its users. It has since soared to surpass $700 for the first time, with Meta delivering continued social media user growth and strong ad performance. Meta's worth buying for its existing fundamentals, but its AI plans could yield years of outsized returns.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, 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 has positions in and recommends Alphabet, Apple, Berkshire Hathaway, Meta Platforms, and Palantir Technologies. The Motley Fool has a disclosure policy.