2 No-Brainer Artificial Intelligence (AI) Stocks to Buy in March

The companies that are enabling the growth of artificial intelligence (AI) have led the stock market to new highs over the last few years. Concerns over near-term headwinds to the economy have weighed on stocks this year, but investors that take advantage of this volatility to buy top AI stocks at lower valuations should realize great returns down the road.

PwC's Sizing the Prize report reveals that AI could increase global gross domestic product by 14% by 2030. That would be over $15 trillion in value added to the economy.Here are two stocks of incredibly strong businesses to help you profit from this opportunity.

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1. Amazon

Amazon (NASDAQ: AMZN) is one of the strongest brands in retail, with over 200 million customers paying membership fees to receive Prime benefits like free shipping and digital entertainment, among other perks. But the online superstore is also a major player in AI, which could have a major impact on its growth potential.

Amazon Web Services (AWS) is the leading cloud service provider and is one of Amazon's fastest-growing businesses, with revenue up 19% year over year in the fourth quarter. It is experiencing strong demand for AI-related services that allow businesses to build AI applications and automate business processes. It will continue to be a major growth catalyst for Amazon's business. While cloud revenue only makes up 15% of its total business, AWS comprises around half of the company's operating profit.

What's more, Amazon's AI investments also benefit its online retail business. It has launched AI-powered shopping assistants like Rufus and Amazon Lens, which lets customers take a picture of a product and find it in Amazon's mobile app. These AI tools could play a big role in converting more sales and continuing to grow Amazon's $247 billion in revenue from its online store.

Amazon has massive resources to keep innovating on behalf of its customers. Its net income grew to $59 billion last year on $638 billion of total revenue. Wall Street analysts are projecting the company's earnings to grow at a compound annual rate of 21%. With millions of people making repeat purchases with their Prime membership, on top of the growth potential in cloud services, this might be the only AI stock you need.

2. Alphabet (Google)

Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google and YouTube are two valuable internet brands that are benefiting from AI. The strong growth the company has experienced over the last year shows how efficiently Alphabet can realize returns from its AI investments across digital advertising and cloud services.

Alphabet is one of the leading online advertisers, primarily due to operating the most widely used search engine. Google Search generated $54 billion of the company's $96 billion in total revenue in the fourth quarter. Advertising is a lucrative business, helping Alphabet generate $100 billion in net profit on $350 billion in revenue in 2024.

The downside is that ad spending is dependent on a growing economy. However, Alphabet's revenue still grew 10% in 2022 when the ad market was tanking, and that's largely because more of the $1 trillion in annual ad spending is gradually shifting to digital platforms.

Alphabet can capture more of that opportunity by integrating AI across all its services. Google's Gemini AI model is considered one of the best models currently available. Gemini powers all of the company's products that have over 2 billion users, including Search, Gmail, Maps, and YouTube. AI is making Google's services more helpful and driving increasing usage. This can lead to higher spending from advertisers.

Google also operates one of the leading enterprise cloud services. Google Cloud posted revenue growth of 30% year over year in the fourth quarter. It is seeing strong demand for AI-powered data analytics, cybersecurity, and Vertex AI, a developer platform that helps customers build and deploy their own AI models.

Analysts expect the company's earnings to grow at an annualized rate of 17% over the next several years. The stock's modest forward price-to-earnings multiple of 18 makes it a buy right now.

Should you invest $1,000 in Amazon right now?

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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. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Amazon. The Motley Fool has a disclosure policy.