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

Investors should stay informed about the latest technology trends and opportunities in the growing artificial intelligence (AI) market. This article highlights three excellent AI investment opportunities that are not only at the forefront of AI innovation but are also relatively affordable. These stocks are poised for significant growth and offer fantastic investment potential.

Amazon: The E-Commerce Giant Leveraging AI

Nicholas Rossolillo (Amazon): Amazon (NASDAQ: AMZN), a leader in e-commerce and cloud infrastructure, has seen a remarkable 50% rally in the past year. Despite its massive market cap of $2 trillion, Amazon's revenue, nearing $600 billion annually, surpasses all its tech peers.

Amazon's low-margin e-commerce business has traditionally held back its valuation, but the company's new AI initiatives are set to change that. With billions invested in AI data centers filled with Nvidia's advanced computing systems, Amazon aims to convert more sales into earnings. This strategy has already led to a 170% increase in operating income over the past year.

Trading at 46 times trailing 12-month free cash flow, Amazon remains a strong long-term investment as its AI plans unfold.

Intel: The Undervalued AI Contender

Billy Duberstein (Intel): Intel (NASDAQ: INTC) has struggled this year, down 33%, but the second half of 2024 could mark a turnaround. The company's "five nodes in four years" plan aims to regain chipmaking process leadership by 2025.

Recent developments are promising, with Intel now in mass production on its Intel 3 process technology. Upcoming innovations, including gate-all-around transistors and backside power inputs, are expected to help Intel catch up with competitors like Taiwan Semiconductor Manufacturing.

Trading at one-seventh the market cap of Taiwan Semiconductor, Intel has significant upside potential if it successfully executes its turnaround plan.

Alphabet: The AI Leader Built to Last

Anders Bylund (Alphabet): Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is a top-quality stock with tremendous long-term prospects, leading the AI field through its Google DeepMind division. Innovations like the Gemini large language model and the Veo generative video creator demonstrate Alphabet's relentless drive in AI.

Despite the rise of generative AI, Google Search remains the dominant search engine, capturing 91.1% of the global market. Alphabet's valuation, with a P/E ratio of 28.5, offers a more affordable entry point compared to other AI stocks.

Alphabet is a sustainable, long-term investment with diverse revenue streams, making it a smart choice for those looking to invest in AI.

Investment Considerations

These three companies offer more stability and growth potential compared to Nvidia, which has experienced cyclical performance. Investing in Amazon, Intel, and Alphabet provides a balanced approach to benefiting from AI's growth without the high volatility associated with Nvidia.