April 18, 2024


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Market decline?  3 Artificial Intelligence (AI) Stocks You Can Buy for $1,000 and Hold Forever

Market decline? 3 Artificial Intelligence (AI) Stocks You Can Buy for $1,000 and Hold Forever

The last few months, with stock prices primarily rising, have been great. However, investment sentiment can also trap investors and shorten memories. It wasn't long ago that the mood on Wall Street was ominous and gloomy.

It's easy to forget how volatile Wall Street is. Generally, the market does not move in one direction for very long, and a pivot can sometimes happen quickly. Many technology stocks have had sudden turmoil over the past week or so, which may indicate that the first correction of this bull market has begun.

Accept it. Corrections are healthy and allow investors to buy high-flying stocks on pullbacks. Some of the pioneering Artificial Intelligence (AI) Stocks come to mind here.

Here are three stocks that investors can buy for under $1,000 and hold with confidence for the long term. Consider biting back now and buying more aggressively if the market continues to be weak.

1. Palantir Technologies

Data and artificial intelligence software company Palantir Technologies (NYSE: BLT) Generates a ton of growth Momentum with commercial clients After building its business that primarily serves the US government and its allies. Palantir builds custom software on its own platforms that helps customers analyze data and trends, aiding real-time decision making in end markets ranging from national security to healthcare. The bottom line is that data has become a competitive advantage, and Palantir is helping its customers leverage their data.

It's still remarkably early in Palantir's growth story. The company ended 2023 with just 375 merchant accounts. There are 350,000 large companies around the world. Now, Palantir's top 20 customers spend more than $55 million annually on average, so this program won't fit into every company's budget. But it seems plausible that Palantir could build a customer base in the thousands over the next decade and beyond.

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Best of all, Palantir has also become a very profitable company. It's consistently profitable under generally accepted accounting principles (GAAP), and analysts believe earnings could compound by 26% annually over the next three to five years. It's not cheap, even for its expected growth, at 69 times earnings. Investors should enjoy a downturn in the market offering Palantir at lower prices.

2. Microsoft

Technology conglomerate Microsoft (NASDAQ:MSFT) It has entered the AI ​​fray, building on its Azure cloud platform and its strong partnership with ChatGPT and Sora Creator OpenAI. Microsoft is integrating AI technology into its businesses, including Microsoft 365, Bing Search, and enterprise software applications. Azure also powers AI for other companies as the world's second leading cloud platform.

The great thing about Microsoft is that it's such a strong, integrated company that investors get some positives from AI but ultimately keep shares forever. Microsoft generates nearly $70 billion in annual free cash flow and carries a fortress-like balance sheet with a AAA credit rating, higher than that of the U.S. government. In other words, Microsoft may be the least likely company in the world to fail.

The combination of AI excitement and Microsoft's good reputation has priced the stock at a high 34 times earnings, and analysts expect earnings growth to average 16% per year going forward. If market weakness pulls shares down from all-time highs, investors should put Microsoft near the top of their buy list.

3. CrowdStrike Holdings

Cybersecurity is a huge long-term growth trend. The increasingly digital economy requires better security technology to protect against sophisticated attacks and hackers. CrowdStrike Holdings (NASDAQ:CRWD) It is among a new group of next-generation security platforms that use cloud technology and artificial intelligence to provide real-time protection that adapts and improves quickly.

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CrowdStrike sells different products and services in modules, and customer cross-selling has supported strong revenue growth. Nearly 63% of customers are paying for at least five units as of CrowdStrike's fiscal third quarter 2024, and 26% are paying for seven or more units. The business is highly profitable, converts 30% of its revenue into cash flow, and has an additional $2.4 billion in net cash.

The stock has been on a tear, rising 170% over the past year. Today, CrowdStrike trades at 80 times earnings, which is steep, even with annual earnings growth expected to average 36%. Again, investors should not try to time their first purchase perfectly, but do jump in everything at once for fear of missing the boat. Build a position slowly, and go long if the market starts pouring cold water on the stock's hot momentum.

Should you invest $1,000 in Palantir Technologies now?

Before you buy shares in Palantir Technologies, consider the following:

the Motley Fool stock advisor The analyst team has just defined what they think it is Top 10 stocks Let investors buy it now… and Palantir Technologies wasn't one of them. The 10 stocks that were downgraded could deliver huge returns in the coming years.

Stock advisor It 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 The service has more than tripled the return of the S&P 500 since 2002*.

See 10 stocks

*Stock Advisor returns as of February 20, 2024

Justin Pope He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike, Microsoft, and Palantir Technologies. The Motley Fool recommends the following options: long $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has Disclosure policy.

Market decline? 3 Artificial Intelligence (AI) Stocks You Can Buy for $1,000 and Hold Forever Originally published by The Motley Fool

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