The hype around artificial intelligence (AI) is justified. AI represents a ground-breaking technology poised to transform existing industries and create new ones over the coming decades. According to an analysis by Bloomberg Intelligence, the market for generative AI is poised to reach $1.3 trillion by 2032. That’s a 43% annualized growth rate from today.
Generative AI involves creating content using computer systems and large language models (LLMs) like ChatGPT. As you might imagine, the investment upside is tremendous for cutting-edge companies with the chips, models, data, and applications to help generative AI realize its potential. These five generative AI stocks below have already produced stellar returns but still have the appropriate growth prospects and valuations to reward long-term investors. Consider buying and holding them today.
1. Nvidia – The Leader in AI Computing Power
AI models require vast computing power, which is where Nvidia comes in. Nvidia’s graphics processing unit (GPU) chips are the go-to for training AI models. That’s where AI digests vast amounts of data to learn. The company captured the market with its Hopper architecture (H100 chip) and is starting to roll out Blackwell, its next-generation AI chip line.
Nvidia’s business performance over the past two years is arguably unprecedented, and it’s poised to continue as AI hyperscalers like Microsoft and other big technology companies invest billions of dollars to build the capacity to support generative AI’s growth. Nvidia’s stock may seem expensive at a forward price-to-earnings (P/E) ratio of 48, but analysts estimate the business will grow earnings by an average of 38% annually over the long term. That’s a price/earnings-to-growth (PEG) ratio of just 1.3, meaning the growth justifies the valuation.
The stock might be volatile along the way, especially after such a strong performance in recent years. However, with Nvidia’s dominant position in AI computing power and its continued innovation, it remains one of the top picks for investors looking to ride the generative AI wave.
2. Amazon – A Critical Partner for Generative AI
E-commerce giant Amazon may not be an obvious generative AI winner at first glance, but it operates Amazon Web Services (AWS), the world’s largest cloud-computing platform, making it a critical partner for any company deploying AI technology in real-world applications.
Additionally, Amazon has first-party data on the customers who shop on its site or use any of the services included in its Amazon Prime subscription. It has unleashed a network of over 100 million active smart devices via its Alexa technology, a perfect distribution system for generative AI applications.
Amazon is involved in various industries, such as e-commerce and digital advertising, so it’s a bit more diversified than other AI stocks. Analysts estimate Amazon will grow earnings at a brisk 22% annually over the next three to five years, which is plenty of time to make the stock a buy today at its current forward P/E ratio of 36.
3. Alphabet – The Parent Company Behind Google
Alphabet, the parent company behind Google, has been investing heavily in AI research and development. Its DeepMind subsidiary has made significant breakthroughs in machine learning, and its Google Cloud division is a leading provider of cloud computing services for AI applications.
As a result, Alphabet is well-positioned to benefit from the growth of generative AI. Analysts estimate the company will grow earnings at an average rate of 16% to 17% annually over the long term, making it a bargain at just 21 times forward earnings.
4. Microsoft – A Leader in Cloud Computing
Microsoft has been investing heavily in its Azure cloud computing platform, which is gaining traction as a leading provider of AI services. Its acquisition of GitHub has also given it a significant presence in the developer community, further increasing its potential for growth.
Analysts estimate Microsoft will grow earnings at an average rate of 18% to 20% annually over the long term, making it another attractive pick for investors looking to ride the generative AI wave.
5. Broadcom – A Leader in AI Chip Design
Broadcom is a leading provider of AI chip design and manufacturing services. Its high-performance computing chips are used by companies such as Google, Amazon, and Microsoft to power their AI applications.
As the demand for AI continues to grow, Broadcom’s business should also continue to thrive. Analysts estimate the company will grow earnings at an average rate of 25% to 30% annually over the long term, making it a compelling pick for investors looking to benefit from the growth of generative AI.
Investing in Generative AI: A $1.3 Trillion Opportunity
The market for generative AI is expected to reach $1.3 trillion by 2032, with many companies already investing heavily in this space. These five stocks are well-positioned to benefit from the growth of generative AI and should be considered by investors looking to ride the wave.
However, it’s essential to remember that investing in AI is a long-term game. While these stocks have performed well in recent years, their valuations may be higher than their fundamental value. Therefore, it’s crucial to do your own research and consider multiple factors before making an investment decision.
Disclosure:
The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft.
Justin Pope has no position in any of the stocks mentioned.
