Stocks to buy

Artificial intelligence (AI) is a revolutionary technology that helps people access relevant information more quickly and increase their productivity. While OpenAI’s ChatGPT has taken center stage recently, many companies use AI in the background to improve their services and increase their revenue.

Some high-potential AI stocks use this technology to make product recommendations, while other firms use it to manage risk and assist with services. The possibilities of AI continue to expand rapidly.

AI offers several perks for consumers, but what about investors? What are the top AI companies to invest in? Investors have several ways to profit from AI, but some opportunities are more compelling than others. These are some of the best AI stocks for high returns.

Amazon (AMZN)

Source: Tada Images / Shutterstock.com

Amazon (NASDAQ:AMZN) is a trillion-dollar conglomerate that established its start with e-commerce. While e-commerce is still a large segment of Amazon’s business, its expansion into cloud services, AI and other ventures has created more opportunities for the company.

Amazon Web Services uses artificial intelligence tools as part of its AI Services, which help web developers create AI apps. The software also helps web developers enable personalized recommendations that increase customer engagement. Amazon uses similar recommendations on its e-commerce platform to increase the average order value of each customer.

While AI has improved Amazon’s offerings and driven revenue growth, this technology can also improve Amazon’s bottom line. Amazon is using AI in its warehouses to increase efficiency and reduce costs.

The current valuation is high, but not as high as it appears on paper. The company’s current price-to-earnings (P/E) ratio is above 200. This is in part due to the corporation’s unprofitable Rivian (NASDAQ:RIVN) investment.

This investment cost Amazon $7.6 billion, a loss that still impacts the company’s P/E ratio. Amazon’s forward P/E ratio is a more reasonable 62, but it is still pricey. Rising revenue combined with lowering expenses can help this profitable company reach a more reasonable valuation and become a durable leader in the AI industry.

Advanced Micro Devices (AMD)

Source: JHVEPhoto / Shutterstock.com

AI technology uses significant computing power that depends on AI chips. Without these semiconductor chips, AI becomes less feasible and harder to scale. While some companies produce AI tools, you can also buy certain semiconductor stocks to make a fortune with AI.

Advanced Micro Devices (NASDAQ:AMD) is one of those high-potential AI stocks. The company produces AI chips, a solution that is far superior to general-purpose chips. As the demand for AI surges, companies will need chips from Advanced Micro Devices to power up their AI solutions.

Advanced Micro Devices may follow in the steps of Nvidia (NASDAQ:NVDA). The company recently posted strong guidance that significantly exceeded analysts’ expectations. Both companies produce AI chips and have considerable runways, but Advanced Micro Devices is more affordable.

Advanced Micro Devices has a 1.59 PEG ratio while Nvidia has a 4.69 price-to-earnings-to-growth (PEG) ratio. The stock soared over 40% in May, which may be difficult to follow up on in the coming months. However, Advanced Micro Devices stands as one of the best AI stocks for high returns if you stretch your time horizon to a few years.

Adobe (ADBE)

Source: JHVEPhoto / Shutterstock

Adobe (NASDAQ:ADBE) is a computer software company that posts double-digit revenue growth and quarterly profit margins above 20%. Its P/E ratio is a touch over 40, making it more reasonably valued than most of the other best stocks for AI investments.

The company recently added Adobe Firefly to Photoshop. Firefly has a range of AI tools that streamline the content creation process. Creatives can use Adobe Firefly to readily create videos, audio clips and images. You can type what you want and have a file ready to go. These resources are designed to increase content creators’ productivity which can lead to higher demand.

Adobe trained its AI to display and alter images that have been labeled for commercial use. Other AI solutions can display copyrighted images, which can create legal challenges. Adobe lets its users sidestep that obstacle and still get quality images, videos and audio clips from their text prompts.

Adobe is working on additional features that will make them the go-to choice for more content creators. Between advanced creative blocks, video editing done in seconds, and quicker 3D modeling, the corporation stands to benefit from AI.

On this date of publication, Marc Guberti did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.