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Artificial intelligence (AI) is coming in a big way. A recent United Nations Trade and Development report estimates that the global artificial intelligence market will grow to $4.8 trillion by 2033, a staggering 25-fold increase in just a decade. Investors are already seeing early clues about which companies will emerge as winners in arguably the most significant market opportunity of this generation. There has been and will continue to be a lot of hype around AI, of course. That said, these two "Magnificent Seven" stocks have emerged as frontrunners. Yes, everyone already knows who these companies are. Yet, it seems they will continue to deliver against ever-increasing expectations. Here are the two AI stocks you'll want to buy and hold for the next decade. Alphabet hits on nearly every meaningful aspect of the AI opportunity Alphabet (GOOG +0.41%) (GOOGL +0.70%), the parent company of Google, has surged since emerging relatively unscathed from its high-profile antitrust lawsuit defeat. The market is now focusing on all of the AI momentum bubbling to the surface. For starters, Alphabet has built its Gemini AI products using the mountain of first-party data it gathers from the billions of people who use its various Google products and services. It has woven Gemini into most of the Google ecosystem. Additionally, the Gemini AI app, a competitor to ChatGPT, has taken off, reaching a whopping 650 million monthly active users. Then, you have Google Cloud, which continues to put up robust growth, including a 34% jump in the third quarter. Alphabet has also developed Tensor Processing Unit (TPU) chips for AI, custom application-specific integrated circuits (ASICs) for machine learning workloads, sending a shot across the bow at Nvidia, which has dominated the AI data center chip market for the past few years. Lastly, Alphabet has begun to see the fruits of its years of work developing autonomous driving technology at its Waymo subsidiary. Waymo launched fully autonomous ride-hailing in 2020, has served over 10 million rides to date, and is expanding across the United States, with plans to push into London next year. And, oh yeah, Alphabet's core Google search business, which investors once feared would crumble under pressure from AI chatbots, continues to thrive. Revenue from Google Services grew by 14.5% year over year in the third quarter. Alphabet is executing at a high level right now, which could continue over the next decade if AI genuinely becomes a multitrillion-dollar market. Strong enterprise relationships and OpenAI stake make Microsoft a no-brainer Microsoft (MSFT 0.17%) was one of the first companies to spot the AI opportunity. It first partnered with and invested in OpenAI, the developer behind the leading AI chatbot ChatGPT, back in 2019. The relationship between the two companies has been volatile at times, especially as OpenAI continues to grow. Still, Microsoft remains a key partner for OpenAI. The two companies recently announced the latest iteration of their partnership. A new deal gives OpenAI some new flexibility to pursue growth, but continues to tie the two companies together through 2032. Microsoft still owns 27.5% of the company via a stake worth approximately $135 billion at OpenAI's current valuation. OpenAI also committed $250 billion of new cloud business to Azure as part of its agreement. Azure is already the world's second-largest cloud platform, and Microsoft just reported 25% year-over-year revenue growth for the quarter ending Sept. 30. Experts at Goldman Sachs estimate that AI-related demand could drive cloud service revenue to $2 trillion by 2030, and Azure's strong performance and OpenAI's new commitments speak to that growth trend. Ultimately, Microsoft's AI successes over the next decade will probably come primarily from working with corporate customers to implement AI software, funneling that business through Azure. Microsoft already has deep ties with countless companies that use Azure, as well as Microsoft 365, Windows, Teams, and other programs. So, even though Microsoft hasn't innovated as much as Alphabet with first-party AI software, the OpenAI partnership has proven immensely beneficial and should continue to position Microsoft at the forefront of the AI opportunity, especially among enterprise users. Until OpenAI files to go public, investing in Microsoft is the best way to own a piece of the leading AI developer.
