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2 No-Brainer Artificial Intelligence (AI) Stocks to Buy in March

2 No-Brainer Artificial Intelligence (AI) Stocks to Buy in March

  • 18.03.2025 02:37
  • theglobeandmail.com
  • Keywords: AI, Stock Market

Amazon and Alphabet (Google) are top AI stocks to buy in March. Both companies leverage AI across their businesses, with strong cloud services and product integration driving growth.

Alphabet ServicesAmazon ReportsAMZNsentiment_satisfied

Estimated market influence

Amazon

Amazon

Positivesentiment_satisfied
Analyst rating: Strong buy

Amazon is a major player in AI through AWS and its retail innovations.

Alphabet (Google)

Positivesentiment_satisfied
Analyst rating: N/A

Alphabet leverages AI across its services, including Google Search and YouTube.

Context

Analysis of AI Stocks: Amazon (AMZN) and Alphabet (GOOG/GOOGL)

Key Insights and Market Implications

1. Amazon (AMZN)

  • Business Model Strength: Dominance in e-commerce, cloud services, and AI integration.
  • Financial Performance:
    • AWS revenue growth: 19% YoY.
    • AWS profit contribution: ~50% of operating profit despite being 15% of total revenue.
    • R&D investment: $59B in 2022 on $638B revenue.
  • AI Initiatives: Tools like Rufus and Amazon Lens enhance retail operations, aiming to boost sales from its $247B online store revenue.
  • Growth Projections: Analysts predict 21% CAGR for EPS growth.

2. Alphabet (GOOG/GOOGL)

  • Business Model Strength: Dominance in digital advertising and cloud services, leveraging AI across products.
  • Financial Performance:
    • Google Search revenue: $54B Q4, contributing to $96B total revenue.
    • Net profit: $100B on $350B revenue in 2024.
    • Cloud services growth: 30% YoY driven by AI solutions like Vertex AI.
  • AI Integration: Gemini enhances services (Search, Gmail, Maps, YouTube), boosting user engagement and ad revenue.
  • Growth Projections: Expected 17% EPS CAGR, with a modest P/E of 18.

Market Trends and Competitive Dynamics

  • Cloud Services: AWS leads, while Google Cloud is rapidly growing, positioning both companies to benefit from AI-driven enterprise solutions.
  • Digital Advertising: Alphabet's dominance in search and digital ad market suggests sustained growth despite economic fluctuations.
  • AI Adoption: The shift towards AI-powered services across industries indicates long-term growth opportunities for both companies.

Strategic Considerations

  • Innovation Investment: Both companies' significant R&D investments highlight their commitment to staying ahead in AI, reinforcing their competitive positions.
  • Market Leadership: Amazon's AWS and Alphabet's Google maintain strong market leadership, with Alphabet leveraging its broad product portfolio for extensive AI integration.

Long-Term Effects and Industry Impact

  • Economic Shifts: AI's projected $15T GDP boost by 2030 suggests sustained growth across industries, benefiting companies like Amazon and Alphabet.
  • Regulatory Considerations: Potential future regulations could impact these tech giants, though specifics are not detailed in the analysis.

Conclusion

Both Amazon and Alphabet are strategically positioned to capitalize on AI's transformative potential. Their strong financials, innovation investments, and market leadership make them key players in shaping the future of technology and business.