2 Top Artificial Intelligence Stocks to Buy While They're on Sale

There's a lot of uncertainty for the economy, but sticking with top artificial intelligence (AI) companies still seems like a good investment. The productivity gains from adopting this technology will continue to attract investment by leading companies and drive returns for investors over the next decade.

Amazon (NASDAQ: AMZN) and Meta Platforms (NASDAQ: META) are two leading tech companies that are well positioned to benefit from AI. Here's how these companies are benefiting from this technology and why it could benefit their share prices over the long term.

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1. Amazon

Shares of Amazon have fallen 31% from recent highs. Tariffs and the resulting higher prices for imported goods could hurt consumer demand for the leading online retailer. But the near-term pressure on retail sales could pale in comparison to the opportunities to reduce costs and grow profits with AI.

Last year, Amazon's revenue grew 11% to reach $638 billion, mostly driven by double-digit growth in non-retail services including Amazon Web Services and advertising. Its net income nearly doubled to $59 billion.

AI is helping Amazon better optimize inventory placement and delivery routes, which are helping reducing costs and boost profits. It also uses robotics to streamline order processing in its warehouses. These are long-term investments that could lead to significant cost savings and earnings growth.

It has been pushing toward same-day delivery for several years, but there is still a lot of room for improvement. Amazon is offering drone deliveries in a few areas with plans to roll it out in more cities over time. It can deliver packages to customers in under an hour. The long-term benefit of achieving faster delivery speeds is higher purchase frequency. More frequent sales lead to higher inventory turnover, which can boost Amazon's cash flow.

Sure, a recession could pressure Amazon's business this year. But the stock is trading at an attractive valuation. Analysts expect the company's earnings to grow at an average annual rate of 20% in the years to come. Investors could see solid gains on their investment from these depressed share prices.

2. Meta Platforms

Fears of a recession are also impacting the stocks of leading advertising companies. Instagram owner Meta Platforms has seen its share price fall 15% this year. It's one of the leading digital advertisers, with more than 3.3 billion people using one of its services every day.

The last time the advertising market slowed was 2022, which sent Meta's stock down 64%. The stock has since skyrocketed 311%. Meta can struggle to deliver strong growth when the economy is down, but that's when investors can buy shares at lower prices that undervalue the company's future growth. Meta Platforms is operating in a $700 billion digital ad market.

Meta posted impressive growth last year, with revenue and earnings up 21% and 60%, respectively. This strong performance came during a year when the company launched Meta AI, a highly intelligent assistant that has already been used by more than 700 million people.

Meta is also using AI to more optimally place the right ads in front of users. Meta's Andromeda machine learning system, which it developed in partnership with Nvidia, can analyze millions of ads to find the right one to show on its platforms. The past year has shown how AI can boost engagement across the company's family of apps, while also helping advertisers increase their return on investment and target the right users.

The company's massive user base and solid financials, with net income of $62 billion last year, make this a top tech stock to bet on for the long term. Analysts expect the company's earnings to grow at an average annual rate of 14% in the coming years, yet the stock trades at just 21 times earnings.

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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. 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. John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Amazon, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.