A Once-in-a-Decade Investment Opportunity: 2 Brilliant AI Stocks to Buy Now (Hint: Not Nvidia or Palantir)

Key Points

• Artificial intelligence (AI) is arguably the most transformative technology since the internet reshaped the global economy.

• Amazon has developed artificial intelligence products that strengthen its market position in e-commerce, advertising, and cloud computing.

• Pure Storage is a recognized leader in enterprise flash storage, an essential technology for demanding data center workloads like artificial intelligence.

• 10 stocks we like better than Amazon ›

Analysts generally agree that artificial intelligence (AI) will transform the global economy unlike any technology since the internet in the late 1990s. By expanding market access and supporting new business models, the advent of the internet was a substantial opportunity for investors, giving rise to companies like Alphabet, Meta Platforms, and Netflix.

The AI revolution promises to be another once-in-a-decade investment opportunity. By automating tedious tasks and improving worker productivity, AI should boost economic output. While Nvidia and Palantir are cornerstones of the AI trade, investors can also benefit by owning Amazon (NASDAQ: AMZN) and Pure Storage (NYSE: PSTG).

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Here are the important details.

Image source: Getty Images.

1. Amazon

Amazon has a strong position in three industries. It runs the largest online marketplace in North America and Western Europe by gross merchandise volume; it is the largest retail advertiser in the world by sales; and it is the largest cloud computing platform by infrastructure and platform services spending.

Artificial intelligence is at the center of its growth strategy in all three segments. In retail, Amazon has built more than 1,000 generative AI applications to optimize tasks like inventory placement, demand forecasting, customer service, and last-mile delivery. In advertising, the company has built generative AI tools that let brands create audio, images, and videos.

And in cloud computing, Amazon has designed custom AI chips for training and inference, and introduced new platform services like Bedrock for generative AI application development, and Amazon Q for developer and business productivity. IT consultancy Gartner recently scored Amazon Q as the second-most capable AI coding assistant, behind Microsoft‘s GitHub Copilot.

Looking ahead, Wall Street expects Amazon’s earnings to increase at 18% annually over the next three years. That makes the current valuation of 33 times earnings look reasonable. But the consensus forecast leaves room for upside. Morgan Stanley see Amazon’s retail business as the most underappreciated beneficiary of generative AI. That is a compelling reason to own the stock.

2. Pure Storage

Pure Storage provides all-flash storage systems and adjacent software that lets enterprise customers manage data across public clouds and private data centers. It develops products for block, file, and object storage, and its DirectFlash technology eliminates many inefficiencies associated with traditional solid state drives by managing flash memory at the system level rather than the device level.

By eliminating redundancies, Pure Storage’s DirectFlash technology delivers two to three times more storage density while consuming half the power as the closest products on the market. Also, the company has further differentiated itself with Evergreen architecture, which lets clients upgrade their data storage infrastructure with no downtime or disruption.

Gartner has ranked Pure Storage as a leader in primary block storage platforms, and file and object storage platforms. The analysts said its FlashBlade systems have the highest density and lowest power consumption in the industry. Those qualities lend themselves to artificial intelligence workloads and likely influenced Meta Platforms’ recent decision to make Pure Storage a “key storage provider.”

Pure Storage reported good third-quarter financial results that beat expectations on the top and bottom lines. Management even increased its full-year revenue and operating profit guidance. But the stock fell 27% after the report, partly because the valuation was stretched, and partly because the market is worried profit margins will fall next year as the company spends more on research and development.

The drawdown creates a buying opportunity. Wall Street expects adjusted earnings to grow at 30% annually through the fiscal year ending in May 2027. That makes the current valuation of 39 times earnings look reasonable. Indeed, the median target price among Wall Street analysts is $100 per share, implying 45% upside from its current price of $69.

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Trevor Jennewine has positions in Amazon, Nvidia, and Palantir Technologies. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, Netflix, Nvidia, Palantir Technologies, and Pure Storage. The Motley Fool recommends Gartner 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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.