Got $3,000? 3 Artificial Intelligence (AI) Stocks to Buy and Hold for the Long Term

Artificial intelligence (AI) emerged as a significant trend in the market in 2024, with numerous stocks finding great success through this innovative technology. Despite the advancements, AI is still in its nascent stage, and there is growing evidence that it will remain a potent catalyst for growth in the coming years. Major technology companies and well-financed startups are increasing their investments in AI, viewing this as a vital opportunity for future development.

In light of this trend, we will explore three AI stocks in areas such as infrastructure, cloud computing, and software, which are currently available at attractive valuations. If you have $3,000 to invest—providing you’ve covered essential expenses, paid off any short-term debt, and fortified your emergency fund—these stocks could be worthy candidates for long-term investment.

Nvidia

One of the top stocks to consider for AI investment is Nvidia (NVDA). Over the past few years, Nvidia has experienced significant growth. Currently, it trades at a forward price-to-earnings (P/E) ratio of around 31 based on analyst estimates for 2025, with a price/earnings-to-growth (PEG) ratio of approximately 0.98. A PEG ratio below 1 typically indicates that a stock is undervalued, even though it is common for growth stocks to carry higher PEG ratios.

Nvidia has established a strong foothold in the graphics processing unit (GPU) market, commanding roughly 90% market share, thanks to its CUDA software. The overriding concern for Nvidia is whether the momentum in AI infrastructure spending will sustain itself. Large language models (LLMs) require increasingly more GPUs for training, prompting the question of when AI companies might slow their spending. If you believe that companies like Microsoft, Amazon, Alphabet (GOOGL), Meta Platforms, and xAI are committed to staying ahead in the AI space, then Nvidia likely represents a smart buy.

Alphabet

Following some uncertainty related to a government antitrust ruling, Alphabet has become one of the more attractively priced big tech stocks, with a forward P/E ratio of just 19 times projected earnings for the next year.

Alphabet shows considerable promise in the AI sector. Its cloud computing division is experiencing rapid revenue growth and has recently become profitable. Last quarter, Google Cloud was the fastest-growing major cloud provider, with a 35% rise in revenue year-over-year to $11.4 billion. The operating income for this segment has notably surged from $266 million to $1.95 billion over the past year. Alphabet is also a leader in creating customized application-specific integrated circuits (ASICs) for AI, which aids in reducing processing times and operational costs.

With its AI capabilities, Alphabet is enhancing user insight and connecting advertisers more effectively. There are also chances for new monetization strategies, as the company usually serves ads only to about 20% of its search queries. If Alphabet were to spin off its profitable divisions like Google Cloud, Waymo, and YouTube, these entities might command even higher valuations due to their leading market positions in respective fields.

Workday

Workday (WDAY) is another stock that presents a compelling investment opportunity, trading at a forward price-to-sales (P/S) ratio of 7.2 and a forward P/E ratio under 31 according to fiscal 2026 estimates. Although Workday is just beginning to leverage AI for growth, it is making significant strides. The company revealed that 30% of its customer expansions last quarter derived from the adoption of AI-driven solutions, particularly its Recruiter Agent and Talent Optimization products.

Management has labeled the upcoming Optimize Agent solution as potentially transformative, as it identifies inefficiencies. Workday also has targeted growth within the federal government sector, aiming to replace outdated costly systems. As the new administration emphasizes efficiency and cost-effectiveness, this could present a lucrative market.

Expecting a revenue growth of mid-teens percentages while also expanding its operational margin could place Workday in a solid position for long-term stock price appreciation.

AI, Stocks, Technology