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Meet the top 5 generative AI stocks leading the $1.3 trillion opportunity by 2032

Meet the 5 Generative AI Stocks on the Cutting Edge of a $1.3 Trillion Opportunity by 2032

The hype around artificial intelligence (AI) is justified. AI represents a groundbreaking 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, with 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

AI models require vast computing power. Nvidia (NASDAQ: NVDA) 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 24-month run, but the long-term prospects are promising. As one of the leading players in the AI chip market, Nvidia is well-positioned to capitalize on the growing demand for generative AI.

2. Alphabet (Google)

Alphabet (NASDAQ: GOOGL), the parent company of Google, has been at the forefront of AI research and development for years. Its DeepMind subsidiary has made significant breakthroughs in machine learning and AI-powered applications. Alphabet’s dominance in search and online advertising provides it with a vast amount of data to leverage for generative AI.

Alphabet’s stock may seem pricey at 21 times forward earnings, but analysts estimate the company will grow earnings by an average of 16% to 17% annually over the long term. With its strong track record of innovation and market leadership, Alphabet is a top choice among investors seeking exposure to generative AI.

3. Amazon

E-commerce giant Amazon (NASDAQ: AMZN) 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. This makes 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.

4. Microsoft

Microsoft (NASDAQ: MSFT) has been investing heavily in AI research and development, with a focus on cloud-based services and machine learning. Its Azure platform provides a robust infrastructure for businesses to deploy generative AI models, while its Office 365 suite includes AI-powered tools like PowerPoint and Excel.

Microsoft’s stock may seem expensive at 30 times forward earnings, but analysts estimate the company will grow earnings by an average of 20% to 21% annually over the long term. With its strong track record of innovation and market leadership, Microsoft is a top choice among investors seeking exposure to generative AI.

5. Broadcom

Broadcom (NASDAQ: AVGO) may not be as well-known for AI research and development as some of the other companies on this list, but it has been making significant strides in the field. Its acquisition of CA Technologies last year expanded its portfolio of AI-powered software tools.

Broadcom’s stock may seem cheap at 18 times forward earnings, but analysts estimate the company will grow earnings by an average of 25% to 30% annually over the long term. With its strong track record of innovation and market leadership in the semiconductor industry, Broadcom is a top choice among investors seeking exposure to generative AI.

Should you invest $1,000 in Nvidia right now?

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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.

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.

Justin Pope has no position in any of the stocks mentioned. 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. The Motley Fool has a disclosure policy.