From Nasdaq:

Interest in artificial intelligence (AI) has surged since the launch of ChatGPT with the industry projected to expand at a 37% annual growth rate until at least 2030, reaching close to $2 trillion before the end of the decade. As a result, tech stocks have soared, with Microsoft stocks up 56% in the last year, thanks to its investment in OpenAI’s AI models.

Microsoft may appear to be the prime AI investment with earnings projected to reach under $16 per share, but multiplying these by their forward price-to-earnings ratios reveals that Advanced Micro Devices and Amazon may have considerably more growth potential. AMD’s stock has climbed 111% year to date, and it could see a 99% increase in stock price by fiscal 2026, compared to Microsoft’s 35% increase.

Advanced Micro Devices is gearing up to challenge AI’s leading chip supplier Nvidia with its new line of graphics processing units (GPUs) and is also seeking to lead its own space within AI by doubling down on AI-powered PCs.

Amazon, on the other hand, has expanded its cloud platform, Amazon Web Services (AWS), to accommodate the rising demand for AI. The company has introduced several AI-powered tools, and its free cash flow has risen by 904% to $32 billion, with revenue up 14% year over year to $170 billion.

Both Amazon and Microsoft are in steep competition in the cloud market, but Amazon’s leading market share in the industry potentially gives it a leg up. With massive growth potential in earnings per share, Amazon’s stock is a no-brainer buy over Microsoft’s for anyone looking to invest in AI.



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