Everyone has been talking about artificial intelligence (AI) over the past couple of years — and it’s easy to understand why. AI has the potential to revolutionize everything from the way you plan your day, thanks to AI assistants, to the way companies run factories and develop products thanks to a wide range of AI tools. Over the past quarters, to help make this happen, companies aiming to benefit from the AI boom have invested billions of dollars in the technology.
Some are makers of AI products and services and will gain by selling these to customers. Others are users of AI and will win as the technology streamlines and improves operations, saving them money. And some companies will reap the rewards in both ways.
In fact, two in particular already are winning in AI. Let’s check out how, today, AI is driving profit growth for the following technology companies.
Amazon (NASDAQ: AMZN) has established itself as a leader in two major growth areas: e-commerce and cloud computing. In e-commerce, it has more than 200 million members in its Prime subscription service, and it’s been using AI to better serve these and other customers. For example, Amazon harnesses the power of AI to design faster and cheaper delivery routes for packages and to streamline operations in fulfillment centers.
All of this is helping it reduce cost to serve, which in turn paves the way to higher profitability.
And through Amazon Web Services (AWS), its cloud computing unit, Amazon sells premium AI products from partners such as Nvidia, as well as its own in-house developed chips and platforms, to customers. These products and services help others easily apply AI to their own businesses, so as more and more companies decide to use AI, AWS, the world’s No. 1 cloud services provider, may see more and more demand.
Demand from AI customers already is driving growth at the company, with AWS reaching a $115 billion annual revenue run rate last year. So, as the AI boom continues, this momentum should too.
Amazon already is a highly profitable company, delivering nearly $60 billion in net income last year. Now, the company’s use of AI to improve efficiency and its sales of AI products in this high-demand market both could spur a new phase of growth in the years to come.
All this makes Amazon a fantastic buy right now for investors interested in betting on future AI winners.
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is a lot like Amazon when it comes to AI, as this technology is making an already strong business even better — and Alphabet’s Google Cloud, like AWS, sells AI products and services to customers.
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