It's only been two years since artificial intelligence (AI) hit center stage on Wall Street. However, think about the internet and how, a few decades since its earliest years, it's still growing and creating new investing opportunities. The odds are high that AI will evolve and grow into the 2050s.
Fortunately, you don't need to think that far ahead.
There are compelling investment opportunities right now in companies proving critical to AI's development. These AI stocks have tremendous growth trajectories for the next three to five years, and their current valuations should allow them to translate much of that growth into investment returns.
Consider buying and holding these AI winners in 2025; by 2030, you'll be glad you did.
Blackwell is setting the stage for Nvidia's next growth phase
Nvidia (NVDA -0.02%) needs little introduction. Its remarkable ascension in AI (due to its immensely popular Hopper AI accelerator chips) has produced staggering growth and investment returns. But as I said, AI remains in its early chapters, as does the company's growth story. Nvidia is transitioning to its next-generation chip design, Blackwell. The immense computing and energy requirements for operating AI models are an underrated story in the field. AI developer OpenAI recently disclosed that it's still losing money on its most expensive subscription plan ($2,400 annually).
Accumulating the raw computing power to enhance AI is important, but AI must also be economically feasible. Therefore, energy efficiency is a big deal. Nvidia's Blackwell chips will perform better than Hopper while operating as much as 25 times more cost-effectively. That has made it a no-brainer for the hyperscalers building out the vast data centers to power AI models. Nvidia has reportedly sold out its Blackwell capacity for 2025 already, and CEO Jensen Huang believes Blackwell's launch will be Nvidia's best ever.
That sets the table for continued growth over the coming years. Analysts estimate that Nvidia will grow earnings by an average of 38% annually for the next three to five years. Today, Nvidia trades at a forward P/E ratio of 51, a rock-solid value for its anticipated growth.
AWS is poised to enjoy vast cloud computing growth moving forward
Amazon (AMZN 0.01%) could be among the biggest AI winners. Its cloud computing platform, Amazon Web Services (AWS), is the global leader, accounting for approximately 31% of the market. Today, enterprises increasingly rent computing power from cloud companies instead of building their own. Most modern software, including AI, operates on the cloud. That positions the company as a direct beneficiary of the impact AI could have on cloud growth.
According to Goldman Sachs, AI's tailwinds could push the market to $2 trillion by 2030. The global cloud market was worth roughly $500 billion in 2023, so that's a tremendous opportunity. Amazon, as the market leader, will undoubtedly benefit from that. That should be music to your ears because AWS is Amazon's largest profit center.
Amazon's business goes far beyond AI and even cloud computing. It's known for being the leading e-commerce company in the United States (by a wide margin) and has built its Prime subscription into a formidable business. Analysts anticipate the company's bottom line growing by 22% annually over the next three to five years. That's enough to warrant buying the stock at its current forward P/E ratio (37) despite shares trading near all-time highs.
Meta's aggressive AI investments could begin paying off
Social media titan Meta Platforms (META -1.16%) remains a digital advertising powerhouse. It generates tens of billions of dollars in free cash flow annually from advertising to the 3.29 billion daily active users on Facebook, Instagram, WhatsApp, and Threads.CEO Mark Zuckerberg has been a longtime proponent of AI and has influenced the company's push into AI and virtual reality. Meta has a dedicated business unit (Reality Labs) that is spending massive amounts of capital to build out the data center capacity needed for Meta to be a leading player in AI.
Meta's capital spend topped $9 billion last quarter, while Reality Labs posted a $4.4 billion operating loss. However, Zuckerberg has stated that realizing a meaningful return may take until the 2030s. It's a massive gamble on the future, but Zuckerberg's foresight has paid off for Meta in the past, and the potential upside of being an AI leader over the coming decade and beyond is worth swinging for. Generative AI alone could be worth over a trillion dollars.
Ultimately, don't let the AI investments distract you from the fact that Meta is a fantastic business right now, even without contributions from Reality Labs. Analysts estimate the company will grow earnings by an average of nearly 18% annually over the next three to five years. Such a strong outlook makes it difficult for investors to pass up the stock at just 25 times forward earnings.
