Warren Buffett's AI Stock Picks: Balancing High-Value and Low-Cost Options for Long-Term Investors

6 Artificial Intelligence (AI) Stocks Inside Warren Buffett's $410 Billion Portfolio

Warren Buffett has managed the Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) investment company since 1965. Over that 59-year stretch, he steered the conglomerate to average annual returns of 19.8%, which is nearly twice the average annual return delivered by the S&P 500 index over the same period. In dollar terms, $1,000 invested in Berkshire stock in 1965 would have grown to $43 million by the end of 2023. The same investment in the S&P 500 would have been worth a mere $312,230. Buffett likes to buy stock in companies with steady growth, consistent profitability, solid management teams, and shareholder-friendly initiatives like dividend schemes and stock buyback programs. One thing Buffett doesn't do is chase the latest stock market trend, so you won't find him piling into artificial intelligence (AI) stocks just because they are generating the best returns right now. That said, at least six of the 47 stocks already in Berkshire's $410 billion portfolio of publicly traded securities now use AI in some capacity. Here's a look at each company and what they're up to in AI. Apple (NASDAQ: AAPL) is Berkshire's largest position. The conglomerate spent about $38 billion accumulating shares since 2016, and the position is now worth $184 billion -- even after Berkshire sold 13% of its stake for tax reasons earlier this year. Apple makes some of the world's most popular consumer devices led by the flagship iPhone, and it could soon be one of the biggest players in AI. Apple just revealed its Apple Intelligence software, which it developed in partnership with ChatGPT creator OpenAI. It's expected to go live in September alongside the new iOS 18 operating system, and it will overhaul many of the company's existing software products. The Siri voice assistant will be powered by ChatGPT, and users will be able to read a summary of their emails in the Mail application with a single tap. Apple Intelligence can also transcribe audio recordings, which means users can spend less time typing. There are more than 2.2 billion Apple devices worldwide, so the company could become the largest distributor of AI to consumers. Some analysts on Wall Street expect the upcoming iPhone 16 to drive a big upgrade cycle because it's rumored to come with a powerful new chip designed specifically for processing AI workloads. 2. Bank of America: 10.5% of Berkshire Hathaway's portfolio Berkshire first bought shares in Bank of America (NYSE: BAC) in 2007, and it's now the conglomerate's second-largest holding. Investors probably don't associate banking with cutting-edge technology, given it's such a slow-moving industry. But Bank of America was an early adopter of AI, launching its AI assistant called Erica way back in 2018. Erica can remind customers about upcoming bills, locate historical transactions, and even offer ideas for saving money and reducing debt. Over the last six years, Erica has logged more than 2 billion interactions with customers, and adoption is accelerating. Bank of America recently introduced Erica to its business clients who use the CashPro platform, and the chatbot is already solving 43% of inquiries autonomously with no human intervention. AI tools like Erica are likely to shrink the human workforce for banks, especially in their customer service departments, and those cost savings can translate into much higher earnings. 3. Coca-Cola: 6.1% of Berkshire Hathaway's portfolio Last year, Coca-Cola (NYSE: KO) allowed generative AI to formulate a new drink called Coca-Cola Y3000. The AI model used customer data to predict what the popular beverage might taste like in the year 3000. It was a great marketing stunt that showcased Coca-Cola's progressive approach to technology, and the company even hired a "head of generative AI" in 2023. The company recently signed a five-year deal with Microsoft, committing to spend $1.1 billion on the Azure cloud platform and its generative AI services. Coca-Cola will use Azure to weave AI throughout its entire organization, enhancing everything from marketing to manufacturing to the supply chain. Berkshire spent $1.3 billion accumulating 400 million shares in Coca-Cola between 1987 and 1994. It never sold a single one, and that position is now valued at $25.1 billion. Plus, Berkshire will collect $776 million in dividend payments from Coca-Cola this year alone, which highlights the powerful effects of compounding over the long term. 4. Visa: 0.5% of Berkshire Hathaway's portfolio Visa (NYSE: V) has more than 4.4 billion cards in circulation worldwide, making it the largest issuer in the industry. Visa doesn't lend any money; it simply operates a payments network, which means it earns a steady stream of fees that grows as more merchants and consumers enter its ecosystem. It's right in the wheelhouse of a patient long-term investor like Buffett, which is why Berkshire has owned the stock since 2011. Visa is constantly battling fraud, which includes highly automated enumeration attacks that use bots to exploit network vulnerabilities. The company just launched a new AI-powered tool for its Visa Account Attack Intelligence (VAAI) platform, which autonomously identifies and assigns a score to enumeration attacks so banks can make more informed decisions on when to block transactions on behalf of customers. But that's not all. Visa's new Stand-In Processing tool steps in when banks suffer outages or network disruptions, using AI to approve and decline transactions so services can continue for customers without interruption. Visa processed over 72 billion transactions in the last quarter alone, and with that much volume and data, automation is essential. Therefore, investors should expect this company to push the boundaries of innovation when it comes to AI. 5. Amazon: 0.5% of Berkshire Hathaway's portfolio Berkshire bought Amazon (NASDAQ: AMZN) stock in 2019, but Buffett often expresses regret for not identifying the opportunity much earlier. Amazon has expanded beyond its roots in e-commerce and now operates in video streaming, digital advertising, cloud computing, and AI. The Amazon Web Services (AWS) cloud division is investing heavily in AI. It developed its own chips, its own large language models (LLMs), and even its own applications, all of which are available to businesses and developers who can use them to either create their own AI products or drive efficiency in their day-to-day operations. Amazon also uses AI to power the recommendation engine on Amazon.com. It learns what customers like so it can show them more of those products to boost sales. Plus, merchants can use Amazon's AI software to create product pages with engaging descriptions and images. Amazon just entered the exclusive $2 trillion club, and there could be plenty of long-term upside ahead thanks to AI. 6. Snowflake: 0.2% of Berkshire Hathaway's portfolio Snowflake (NYSE: SNOW) doesn't fit Buffett's usual criteria. The cloud computing company is growing, but it's a long way from achieving profitability, and it doesn't return any money to shareholders. Berkshire bought Snowflake around the time of its IPO in 2020, and one of Buffett's lieutenants likely made the decision. Snowflake's data cloud helps organizations aggregate their data even if it's spread across multiple cloud platforms, eliminating silos and enabling more effective analysis. The company launched Cortex AI last year, which gives businesses the tools to develop AI models using a mixture of their own data and ready-made LLMs. Cortex AI also includes several AI-powered tools. The Copilot chatbot understands natural language and can offer assistance across Snowflake's platforms, and Document AI allows developers to rapidly extract valuable data from unstructured sources like contracts and invoices. Snowflake is in a great position to thrive in the world of AI, but investors should tread cautiously because its stock is very expensive. The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Apple wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $780,654!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Bank of America, Berkshire Hathaway, Microsoft, Snowflake, and Visa. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Future-Proof Your Portfolio: 3 Low-Cost AI Stocks to Buy in July

Investors need to keep a close eye on technology trends and business ideas in the burgeoning artificial intelligence (AI) market. In this brief review of three stellar AI investment ideas, a panel of Fool.com contributors will focus on tech giants with proven prospects in this arena. These stocks are also relatively affordable. The companies under the lens today are at the forefront of AI innovation while offering fantastic investment opportunities. This lumbering Nvidia customer is up over 50% in a year and could have more to give Nicholas Rossolillo (Amazon): E-commerce and cloud infrastructure provider Amazon (NASDAQ: AMZN) rallied over 50% in the last year. Finally, after the stock was clobbered by the bear market, it reached fresh all-time highs recently. Yet in spite of all its economic might, Amazon's market cap is a lowly $2 trillion, currently in fifth place among the "Magnificent Seven" stocks behind Microsoft, Nvidia, Apple, and Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL). Though it lags behind in total size, Amazon actually rakes in the most sales of any of its tech peers by far. Amazon is homing in on $600 billion in annual revenue. Apple is a distant second place at about $380 billion in trailing 12-month sales. Data by YCharts. Why the disconnect in Amazon's valuation despite swimming in revenue? The reason is simple: The bulk of that revenue is derived from extremely low-margin e-commerce sales. GAAP operating income for the two e-commerce segments North America and International was just 5.8% and 2.8%, respectively, in Q1 2024. But in this new AI era, Amazon is looking to change that. It has billions of dollars worth in new AI data centers in the works, with plans to fill them up with lots of Nvidia accelerated computing systems. The promise of such actions? Amazon will gradually convert more of those sales into actual earnings for its shareholders, using the power of AI. The company is in a tremendous position of strength, and it's an advantage I believe can help the company generate outsized profit gains for years to come. The initial fruits of this labor are already being realized. Amazon's operating income increased nearly 170% in the last reported 12-month stretch to over $47 billion. This explains why the stock has rallied as of late. But if the company's AI plans pan out, there could be much more left to gain. Amazon stock trades for 46 times trailing 12-month free cash flow. I'm more than happy to continue holding my position. The one AI stock down big in 2024 is due for a turnaround Billy Duberstein (Intel): Contrary to most other AI stocks that surged this year, Intel (NASDAQ: INTC) still finds itself down 33% on the year. The company's struggles are well-known. Intel lost the chipmaking process technology lead about a decade ago and has been losing market share to rivals ever since. In addition, new CEO Pat Gelsinger is trying to engineer an expensive turnaround, even as Intel's core PC and data center chip businesses have gone into a downturn. However, the second half of 2024 could mark a turning point in which virtually all of these headwinds turn into tailwinds. Enterprises are lapping the huge 2020-2021 PC cycle, and the Windows 10 operating system will no longer be supported next year. And with the advent of the "AI PC," it's pretty likely these factors will all buoy a PC industry recovery starting in the second half. Additionally, the downturn in non-AI servers appears to be bottoming and turning up, according to a few bullish reports last month from Taiwanese server makers. That should also help Intel's data center business. Also set for the back half, Intel forecast about $500 million in revenue for its Gaudi accelerator, its AI training chip, for the back half of the year. That would be the first meaningful Gaudi revenue for Intel. But the most important thing is for the company to continue executing on its "five nodes in four years" turnaround plan, whereby Intel aims to regain process leadership by next year while also attracting third-party foundry customers. News on that front has been promising. In June, Intel announced it was now in mass production on Intel 3, its third node of the five nodes in its four-year plan, right on schedule. Intel 3 is an important milestone, with process technology aimed at data center applications. The next two nodes will be Intel 20A and 18A. Both of these will incorporate the dual innovations of gate-all-around transistors and backside power whereby the power inputs and outputs are put on the back of the chip, leaving more room on the front for computing power. This is where the rubber will meet the road and where Intel plans to catch Taiwan Semiconductor Manufacturing in process technology. Intel trades at one-seventh the market cap of Taiwan Semiconductor. Should Intel successfully execute and reach its 18A goal on time late in 2024 or early in 2025, its stock likely has further upside in a "catch-up" trade to other AI winners. Alphabet: The low-priced AI leader that's built to last Anders Bylund (Alphabet): Today's stock market is full of potential AI winners -- but I'd rather own a top-quality stock with tremendous long-term prospects that just happens to be an established leader in AI technology, too. That's what Google parent Alphabet brings to the table. In my opinion, Alphabet is the best AI stock to own, even after the stock's impressive 58% price surge over the past year. This tech giant is built to last. The company's AI capabilities, managed in the Google DeepMind group, keep pushing the boundaries of innovation. DeepMind was there to rewrite the rules of chess engines in 2017 and didn't stop there. Their latest rollout of Google AI features shows a relentless drive to stay ahead of the game. The Gemini large language model (LLM) is getting faster and better, while the Veo generative video creator and Imagen 3 image generator set new standards in AI-based media quality. I don't see AI as an effective competitor to Alphabet's traditional core business. Despite all the buzz around generative AI as an alternative to traditional search engines, Google Search remains the undisputed leader, grabbing 91.1% of theglobal marketand boosting profits by nearly 60% in the first quarter. And I'm convinced that Google Search users walk away happier, avoiding the possibility of "hallucination" results from an overly creative AI system. What really sweetens the deal is Alphabet's valuation. With a price-to-earnings ratio (P/E) of 28.5, a price-to-sales ratio (P/S) of 7.2, and price to free cash flow of 33.2, it's a steal compared to Nvidia's sky-high valuations. Alphabet isn't just another player in the AI game -- it started shaping the future of AI long before ChatGPT was a thing and still leads the race. From cutting-edge AI research to practical applications in search, cloud, and even drug discovery, Alphabet is a smart, sustainable pick for the long haul. It's a stock that never looks expensive, and its diverse revenue streams ensure it's here to stay for decades. I'm not worried about missing Alphabet's AI train pulling out of the station. This stock is a long-term buy at nearly any price, and those multicolored shares don't even look expensive today. They even come with a modest dividend nowadays, sweetening the pot for value and income investors. The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Amazon wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $791,929!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Anders Bylund has positions in Alphabet, Amazon, Intel, and Nvidia. Billy Duberstein has positions in Alphabet, Amazon, Apple, Intel, Microsoft, and Taiwan Semiconductor Manufacturing. Nicholas Rossolillo has positions in Alphabet, Amazon, Apple, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short August 2024 $35 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Future-Proof Your Portfolio: 3 Low-Cost AI Stocks to Buy in July | The Motley Fool

Looking for budget-friendly AI investment opportunities? Here are three stellar AI giants to consider today. Investors need to keep a close eye on technology trends and business ideas in the burgeoning artificial intelligence (AI) market. In this brief review of three stellar AI investment ideas, a panel of Fool.com contributors will focus on tech giants with proven prospects in this arena. These stocks are also relatively affordable. The companies under the lens today are at the forefront of AI innovation while offering fantastic investment opportunities. Nicholas Rossolillo (Amazon): E-commerce and cloud infrastructure provider Amazon (AMZN -0.29%) rallied over 50% in the last year. Finally, after the stock was clobbered by the bear market, it reached fresh all-time highs recently. Yet in spite of all its economic might, Amazon's market cap is a lowly $2 trillion, currently in fifth place among the "Magnificent Seven" stocks behind Microsoft, Nvidia, Apple, and Alphabet (GOOG -0.28%) (GOOGL -0.27%). Though it lags behind in total size, Amazon actually rakes in the most sales of any of its tech peers by far. Amazon is homing in on $600 billion in annual revenue. Apple is a distant second place at about $380 billion in trailing 12-month sales. Why the disconnect in Amazon's valuation despite swimming in revenue? The reason is simple: The bulk of that revenue is derived from extremely low-margin e-commerce sales. GAAP operating income for the two e-commerce segments North America and International was just 5.8% and 2.8%, respectively, in Q1 2024. But in this new AI era, Amazon is looking to change that. It has billions of dollars worth in new AI data centers in the works, with plans to fill them up with lots of Nvidia accelerated computing systems. The promise of such actions? Amazon will gradually convert more of those sales into actual earnings for its shareholders, using the power of AI. The company is in a tremendous position of strength, and it's an advantage I believe can help the company generate outsized profit gains for years to come. The initial fruits of this labor are already being realized. Amazon's operating income increased nearly 170% in the last reported 12-month stretch to over $47 billion. This explains why the stock has rallied as of late. But if the company's AI plans pan out, there could be much more left to gain. Amazon stock trades for 46 times trailing 12-month free cash flow. I'm more than happy to continue holding my position. Billy Duberstein (Intel): Contrary to most other AI stocks that surged this year, Intel (INTC 2.96%) still finds itself down 33% on the year. The company's struggles are well-known. Intel lost the chipmaking process technology lead about a decade ago and has been losing market share to rivals ever since. In addition, new CEO Pat Gelsinger is trying to engineer an expensive turnaround, even as Intel's core PC and data center chip businesses have gone into a downturn. However, the second half of 2024 could mark a turning point in which virtually all of these headwinds turn into tailwinds. Enterprises are lapping the huge 2020-2021 PC cycle, and the Windows 10 operating system will no longer be supported next year. And with the advent of the "AI PC," it's pretty likely these factors will all buoy a PC industry recovery starting in the second half. Additionally, the downturn in non-AI servers appears to be bottoming and turning up, according to a few bullish reports last month from Taiwanese server makers. That should also help Intel's data center business. Also set for the back half, Intel forecast about $500 million in revenue for its Gaudi accelerator, its AI training chip, for the back half of the year. That would be the first meaningful Gaudi revenue for Intel. But the most important thing is for the company to continue executing on its "five nodes in four years" turnaround plan, whereby Intel aims to regain process leadership by next year while also attracting third-party foundry customers. News on that front has been promising. In June, Intel announced it was now in mass production on Intel 3, its third node of the five nodes in its four-year plan, right on schedule. Intel 3 is an important milestone, with process technology aimed at data center applications. The next two nodes will be Intel 20A and 18A. Both of these will incorporate the dual innovations of gate-all-around transistors and backside power whereby the power inputs and outputs are put on the back of the chip, leaving more room on the front for computing power. This is where the rubber will meet the road and where Intel plans to catch Taiwan Semiconductor Manufacturing in process technology. Intel trades at one-seventh the market cap of Taiwan Semiconductor. Should Intel successfully execute and reach its 18A goal on time late in 2024 or early in 2025, its stock likely has further upside in a "catch-up" trade to other AI winners. Anders Bylund (Alphabet): Today's stock market is full of potential AI winners -- but I'd rather own a top-quality stock with tremendous long-term prospects that just happens to be an established leader in AI technology, too. That's what Google parent Alphabet brings to the table. In my opinion, Alphabet is the best AI stock to own, even after the stock's impressive 58% price surge over the past year. This tech giant is built to last. The company's AI capabilities, managed in the Google DeepMind group, keep pushing the boundaries of innovation. DeepMind was there to rewrite the rules of chess engines in 2017 and didn't stop there. Their latest rollout of Google AI features shows a relentless drive to stay ahead of the game. The Gemini large language model (LLM) is getting faster and better, while the Veo generative video creator and Imagen 3 image generator set new standards in AI-based media quality. I don't see AI as an effective competitor to Alphabet's traditional core business. Despite all the buzz around generative AI as an alternative to traditional search engines, Google Search remains the undisputed leader, grabbing 91.1% of the global market and boosting profits by nearly 60% in the first quarter. And I'm convinced that Google Search users walk away happier, avoiding the possibility of "hallucination" results from an overly creative AI system. What really sweetens the deal is Alphabet's valuation. With a price-to-earnings ratio (P/E) of 28.5, a price-to-sales ratio (P/S) of 7.2, and price to free cash flow of 33.2, it's a steal compared to Nvidia's sky-high valuations. Alphabet isn't just another player in the AI game -- it started shaping the future of AI long before ChatGPT was a thing and still leads the race. From cutting-edge AI research to practical applications in search, cloud, and even drug discovery, Alphabet is a smart, sustainable pick for the long haul. It's a stock that never looks expensive, and its diverse revenue streams ensure it's here to stay for decades. I'm not worried about missing Alphabet's AI train pulling out of the station. This stock is a long-term buy at nearly any price, and those multicolored shares don't even look expensive today. They even come with a modest dividend nowadays, sweetening the pot for value and income investors.

6 Artificial Intelligence (AI) Stocks Inside Warren Buffett's $410 Billion Portfolio | The Motley Fool

Warren Buffett has managed the Berkshire Hathaway (BRK.A 1.66%) (BRK.B 1.35%) investment company since 1965. Over that 59-year stretch, he steered the conglomerate to average annual returns of 19.8%, which is nearly twice the average annual return delivered by the S&P 500 index over the same period. In dollar terms, $1,000 invested in Berkshire stock in 1965 would have grown to $43 million by the end of 2023. The same investment in the S&P 500 would have been worth a mere $312,230. Buffett likes to buy stock in companies with steady growth, consistent profitability, solid management teams, and shareholder-friendly initiatives like dividend schemes and stock buyback programs. One thing Buffett doesn't do is chase the latest stock market trend, so you won't find him piling into artificial intelligence (AI) stocks just because they are generating the best returns right now. That said, at least six of the 47 stocks already in Berkshire's $410 billion portfolio of publicly traded securities now use AI in some capacity. Here's a look at each company and what they're up to in AI. Apple (AAPL 1.30%) is Berkshire's largest position. The conglomerate spent about $38 billion accumulating shares since 2016, and the position is now worth $184 billion -- even after Berkshire sold 13% of its stake for tax reasons earlier this year. Apple makes some of the world's most popular consumer devices led by the flagship iPhone, and it could soon be one of the biggest players in AI. Apple just revealed its Apple Intelligence software, which it developed in partnership with ChatGPT creator OpenAI. It's expected to go live in September alongside the new iOS 18 operating system, and it will overhaul many of the company's existing software products. The Siri voice assistant will be powered by ChatGPT, and users will be able to read a summary of their emails in the Mail application with a single tap. Apple Intelligence can also transcribe audio recordings, which means users can spend less time typing. There are more than 2.2 billion Apple devices worldwide, so the company could become the largest distributor of AI to consumers. Some analysts on Wall Street expect the upcoming iPhone 16 to drive a big upgrade cycle because it's rumored to come with a powerful new chip designed specifically for processing AI workloads. Berkshire first bought shares in Bank of America (BAC -0.53%) in 2007, and it's now the conglomerate's second-largest holding. Investors probably don't associate banking with cutting-edge technology, given it's such a slow-moving industry. But Bank of America was an early adopter of AI, launching its AI assistant called Erica way back in 2018. Erica can remind customers about upcoming bills, locate historical transactions, and even offer ideas for saving money and reducing debt. Over the last six years, Erica has logged more than 2 billion interactions with customers, and adoption is accelerating. Bank of America recently introduced Erica to its business clients who use the CashPro platform, and the chatbot is already solving 43% of inquiries autonomously with no human intervention. AI tools like Erica are likely to shrink the human workforce for banks, especially in their customer service departments, and those cost savings can translate into much higher earnings. Last year, Coca-Cola (KO 0.95%) allowed generative AI to formulate a new drink called Coca-Cola Y3000. The AI model used customer data to predict what the popular beverage might taste like in the year 3000. It was a great marketing stunt that showcased Coca-Cola's progressive approach to technology, and the company even hired a "head of generative AI" in 2023. The company recently signed a five-year deal with Microsoft, committing to spend $1.1 billion on the Azure cloud platform and its generative AI services. Coca-Cola will use Azure to weave AI throughout its entire organization, enhancing everything from marketing to manufacturing to the supply chain. Berkshire spent $1.3 billion accumulating 400 million shares in Coca-Cola between 1987 and 1994. It never sold a single one, and that position is now valued at $25.1 billion. Plus, Berkshire will collect $776 million in dividend payments from Coca-Cola this year alone, which highlights the powerful effects of compounding over the long term. Visa (V 1.22%) has more than 4.4 billion cards in circulation worldwide, making it the largest issuer in the industry. Visa doesn't lend any money; it simply operates a payments network, which means it earns a steady stream of fees that grows as more merchants and consumers enter its ecosystem. It's right in the wheelhouse of a patient long-term investor like Buffett, which is why Berkshire has owned the stock since 2011. Visa is constantly battling fraud, which includes highly automated enumeration attacks that use bots to exploit network vulnerabilities. The company just launched a new AI-powered tool for its Visa Account Attack Intelligence (VAAI) platform, which autonomously identifies and assigns a score to enumeration attacks so banks can make more informed decisions on when to block transactions on behalf of customers. But that's not all. Visa's new Stand-In Processing tool steps in when banks suffer outages or network disruptions, using AI to approve and decline transactions so services can continue for customers without interruption. Visa processed over 72 billion transactions in the last quarter alone, and with that much volume and data, automation is essential. Therefore, investors should expect this company to push the boundaries of innovation when it comes to AI. Berkshire bought Amazon (AMZN -0.29%) stock in 2019, but Buffett often expresses regret for not identifying the opportunity much earlier. Amazon has expanded beyond its roots in e-commerce and now operates in video streaming, digital advertising, cloud computing, and AI. The Amazon Web Services (AWS) cloud division is investing heavily in AI. It developed its own chips, its own large language models (LLMs), and even its own applications, all of which are available to businesses and developers who can use them to either create their own AI products or drive efficiency in their day-to-day operations. Amazon also uses AI to power the recommendation engine on Amazon.com. It learns what customers like so it can show them more of those products to boost sales. Plus, merchants can use Amazon's AI software to create product pages with engaging descriptions and images. Amazon just entered the exclusive $2 trillion club, and there could be plenty of long-term upside ahead thanks to AI. Snowflake (SNOW -1.76%) doesn't fit Buffett's usual criteria. The cloud computing company is growing, but it's a long way from achieving profitability, and it doesn't return any money to shareholders. Berkshire bought Snowflake around the time of its IPO in 2020, and one of Buffett's lieutenants likely made the decision. Snowflake's data cloud helps organizations aggregate their data even if it's spread across multiple cloud platforms, eliminating silos and enabling more effective analysis. The company launched Cortex AI last year, which gives businesses the tools to develop AI models using a mixture of their own data and ready-made LLMs. Cortex AI also includes several AI-powered tools. The Copilot chatbot understands natural language and can offer assistance across Snowflake's platforms, and Document AI allows developers to rapidly extract valuable data from unstructured sources like contracts and invoices. Snowflake is in a great position to thrive in the world of AI, but investors should tread cautiously because its stock is very expensive.

3 AI Stocks to Buy With $1,000 and Hold Forever

Don't let Nvidia's raging popularity distract you from the fact that there are many sorts of artificial intelligence (AI) stocks to choose from. Companies in industries ranging from chips to software are poised to feel the tailwinds of AI growth over the coming years. Investors can position themselves for success by gravitating to bona-fide winners, the cream of the crop that are equipped to stay on top as the AI industry grows and inevitably evolves. Three Fool.com contributors did their homework and came up with Amazon (NASDAQ: AMZN), Qualcomm (NASDAQ: QCOM), and Meta Platforms (NASDAQ: META). These companies have the competitive edge to win over the long haul -- and their stock can be had for just $1,000. The three largest companies in the world -- Apple, Microsoft, and Nvidia -- are at or near 10-year highs when it comes to their price-to-sales (P/S) ratio. This ratio is important because it captures market sentiment, reflecting investors' expectations of future growth, rather than quarter-to-quarter fluctuations in a company's earnings results, which is what price-to-earnings (P/E) ratios tend to do. The takeaway is that many AI stocks are rising to new highs on future expectations of growth, rather than on current sales. However, there are AI companies that are bucking this trend, or at least, they are an example where the size of the increase isn't as large. Here's the same chart, with Amazon's P/S ratio included. NVDA PS Ratio data by YCharts With a current P/S ratio of 3.6x, Amazon's valuation is a fraction of Nvidia's (41.8x); it's also much lower than Microsoft's (14.6x) or Apple's (9.4x). Importantly, Amazon's current P/S ratio is roughly equal to its 10-year average of 3.2x, indicating a stable valuation over time. In other words, while some of its major competitors' stocks have gotten ahead of themselves during the AI boom, Amazon stock still looks highly attractive. On top of that, the company has numerous AI initiatives ranging from smart speakers to its fleet of nearly 1 million humanoid robots. These initiatives, coupled with Amazon's strong financial position, show it is well-positioned to capitalize on the AI revolution and potentially experience significant growth. In summary, investors seeking an AI stock to buy and hold forever should strongly consider Amazon. 2. Qualcomm: Build a connection with this stock Will Healy (Qualcomm): Over the last year, investors have become focused on AI chips. However, just because Nvidia leads the industry does not mean it is the only player. With an increased focus on AI, investors may have more reasons to consider Qualcomm a forever holding. Qualcomm has long served as the leader in smartphone chipsets, and maintaining that leadership in today's market means proficiency in AI. Fortunately, the company has embraced on-device AI. This works collaboratively with cloud AI and its devices, which reside on the edge. Thus, it can deliver AI capabilities faster and more efficiently. Moreover, Qualcomm does not limit these capabilities to smartphones. In recent years, the company has worked to deliver its technology to IoT devices, automotive platforms, and PC chips, amounting to a tech ecosystem powered by AI. Additionally, after a revenue slump in fiscal 2023, Qualcomm has finally begun to rebound. In the first six months of fiscal 2024 (ended March 24), revenue of $19 billion rose 3% compared with the same period in the previous year. Also, total costs and expenses fell 1%, leading to a net income of $5.1 billion in the first half of the fiscal year. That represents a 29% increase from year-ago levels. Also, since Qualcomm forecasts $9.2 billion in revenue at the midpoint in fiscal Q3, its revenue growth rate could reach double digits in the next quarter. Investors have paid increased attention, as the semiconductor stock has risen by approximately 80% over the last year. That took its P/E ratio to around 28, its highest level in over three years. Nonetheless, assuming double-digit revenue growth returns, rising profits should reduce the impact of its rising valuation. Ultimately, improving financials, coupled with Qualcomm's increasing importance in the AI space, should solidify its stock as a profitable long-term holding. 3. Meta Platforms: AI is complementary Justin Pope (Meta Platforms): While searching for the ultimate buy-and-hold AI stock, Meta Platforms kept rising to the top of my list. The pitch for Meta stock is simple but effective. The company is already a clear technology juggernaut today. It makes money on digital ads served to its 3.24 billion daily active users across its social media apps: Facebook, Instagram, WhatsApp, and Threads. It's a lucrative business; Meta converts a robust 35% of its revenue into free cash flow and earns an impressive 29% return on the capital it invests in the business. Meta still offers plenty of growth despite its $1.3 trillion market cap. Analysts believe the company will grow earnings by an average of 18% annually over the long term. AI could play a big role in that. Meta has unleashed AI to improve its advertising business and boost profits. Additionally, the company has invested heavily in AI infrastructure, spending billions of dollars to develop and run generative AI models. The great thing about Meta is that AI won't make or break the stock. AI could unlock the growth needed for Meta to remain a long-term market-beater, but it was already a great business before AI. Meta's CEO and co-founder, Mark Zuckerberg, is still in charge, and he's just 40 years old. You can buy and hold Meta, knowing the company is in good hands for the foreseeable future. Lastly, the stock remains attractive at a P/E ratio of 26 times earnings, a very reasonable price for a business growing earnings by 18% annually. Many other AI stocks have gotten too expensive, meaning Meta could perform much better if it realizes its AI potential. This ultimately makes Meta a no-brainer AI stock investors should buy and hold tight. The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Amazon wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $791,929!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. 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 Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jake Lerch has positions in Amazon and Nvidia. Justin Pope has no position in any of the stocks mentioned. Will Healy has positions in Qualcomm. The Motley Fool has positions in and recommends Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Qualcomm. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

3 AI Stocks to Buy With $1,000 and Hold Forever | The Motley Fool

These companies are winning now and should continue winning for the foreseeable future. Don't let Nvidia's raging popularity distract you from the fact that there are many sorts of artificial intelligence (AI) stocks to choose from. Companies in industries ranging from chips to software are poised to feel the tailwinds of AI growth over the coming years. The three largest companies in the world -- Apple, Microsoft, and Nvidia -- are at or near 10-year highs when it comes to their price-to-sales (P/S) ratio. This ratio is important because it captures market sentiment, reflecting investors' expectations of future growth, rather than quarter-to-quarter fluctuations in a company's earnings results, which is what price-to-earnings (P/E) ratios tend to do. The takeaway is that many AI stocks are rising to new highs on future expectations of growth, rather than on current sales. However, there are AI companies that are bucking this trend, or at least, they are an example where the size of the increase isn't as large. Here's the same chart, with Amazon's P/S ratio included. With a current P/S ratio of 3.6x, Amazon's valuation is a fraction of Nvidia's (41.8x); it's also much lower than Microsoft's (14.6x) or Apple's (9.4x). Importantly, Amazon's current P/S ratio is roughly equal to its 10-year average of 3.2x, indicating a stable valuation over time. In other words, while some of its major competitors' stocks have gotten ahead of themselves during the AI boom, Amazon stock still looks highly attractive. On top of that, the company has numerous AI initiatives ranging from smart speakers to its fleet of nearly 1 million humanoid robots. These initiatives, coupled with Amazon's strong financial position, show it is well-positioned to capitalize on the AI revolution and potentially experience significant growth. In summary, investors seeking an AI stock to buy and hold forever should strongly consider Amazon. Will Healy (Qualcomm): Over the last year, investors have become focused on AI chips. However, just because Nvidia leads the industry does not mean it is the only player. With an increased focus on AI, investors may have more reasons to consider Qualcomm a forever holding. Qualcomm has long served as the leader in smartphone chipsets, and maintaining that leadership in today's market means proficiency in AI. Fortunately, the company has embraced on-device AI. This works collaboratively with cloud AI and its devices, which reside on the edge. Thus, it can deliver AI capabilities faster and more efficiently. Moreover, Qualcomm does not limit these capabilities to smartphones. In recent years, the company has worked to deliver its technology to IoT devices, automotive platforms, and PC chips, amounting to a tech ecosystem powered by AI. Additionally, after a revenue slump in fiscal 2023, Qualcomm has finally begun to rebound. In the first six months of fiscal 2024 (ended March 24), revenue of $19 billion rose 3% compared with the same period in the previous year. Also, total costs and expenses fell 1%, leading to a net income of $5.1 billion in the first half of the fiscal year. That represents a 29% increase from year-ago levels. Also, since Qualcomm forecasts $9.2 billion in revenue at the midpoint in fiscal Q3, its revenue growth rate could reach double digits in the next quarter. Investors have paid increased attention, as the semiconductor stock has risen by approximately 80% over the last year. That took its P/E ratio to around 28, its highest level in over three years. Nonetheless, assuming double-digit revenue growth returns, rising profits should reduce the impact of its rising valuation. Ultimately, improving financials, coupled with Qualcomm's increasing importance in the AI space, should solidify its stock as a profitable long-term holding. Justin Pope (Meta Platforms): While searching for the ultimate buy-and-hold AI stock, Meta Platforms kept rising to the top of my list. The pitch for Meta stock is simple but effective. The company is already a clear technology juggernaut today. It makes money on digital ads served to its 3.24 billion daily active users across its social media apps: Facebook, Instagram, WhatsApp, and Threads. It's a lucrative business; Meta converts a robust 35% of its revenue into free cash flow and earns an impressive 29% return on the capital it invests in the business. Meta still offers plenty of growth despite its $1.3 trillion market cap. Analysts believe the company will grow earnings by an average of 18% annually over the long term. AI could play a big role in that. Meta has unleashed AI to improve its advertising business and boost profits. Additionally, the company has invested heavily in AI infrastructure, spending billions of dollars to develop and run generative AI models. The great thing about Meta is that AI won't make or break the stock. AI could unlock the growth needed for Meta to remain a long-term market-beater, but it was already a great business before AI. Meta's CEO and co-founder, Mark Zuckerberg, is still in charge, and he's just 40 years old. You can buy and hold Meta, knowing the company is in good hands for the foreseeable future. Lastly, the stock remains attractive at a P/E ratio of 26 times earnings, a very reasonable price for a business growing earnings by 18% annually. Many other AI stocks have gotten too expensive, meaning Meta could perform much better if it realizes its AI potential. This ultimately makes Meta a no-brainer AI stock investors should buy and hold tight.