2 Artificial Intelligence (AI) Stocks to Buy Instead

Interest in artificial intelligence (AI) skyrocketed since OpenAI launched ChatGPT in November 2022. The industry is developing rapidly and is projected to expand at a compound annual growth rate of 37% until at least 2030. That trajectory would see the market hit close to $2 trillion before the end of the decade.

As a result, excitement over AI triggered countless tech stocks to soar over the last year. Microsoft (NASDAQ: MSFT) has been one of the biggest winners, with its shares up 56% in the last 12 months. The company is one of OpenAI’s largest investors, a position that affords Microsoft with exclusive access to some of the start-up’s most advanced AI models.

The Windows company is an exciting way to invest in AI. However, companies at slightly earlier stages in their AI ventures could have more room to run over the long term. Advanced Micro Devices (NASDAQ: AMD) and Amazon (NASDAQ: AMZN) are two attractive options. One is carving out a lucrative role in the AI chip market, while the other is leading in the software side of the industry.

Microsoft’s earnings could hit just under $16 per share over the next two fiscal years, while AMD’s and Amazon’s may reach about $7 per share. On the surface, Microsoft looks like a no-brainer.

However, multiplying these figures by the companies’ forward price-to-earnings ratios (Microsoft at 35, AMD at 52, and Amazon at 41) would yield stock prices of $546 for Microsoft, $346 for AMD, and $283 for Amazon. Considering their current positions, these projections would see Microsoft’s stock rise 35%, AMD’s 99%, and Amazon’s 66% by fiscal 2026.

These estimates show that AMD and Amazon have significantly more growth potential over the next two years. So forget Microsoft. Here are two AI stocks to buy instead.

1. Advanced Micro Devices

AMD’s stock has climbed 111% year to date alongside its growing prospects in AI. The tech company is gearing up to challenge AI’s leading chip supplier…