2 No-Brainer Artificial Intelligence (AI) Stocks to Buy With $1,000 and Hold for Decades

Key Points

• Artificial intelligence (AI) could be one of the largest financial opportunities in the history of the technology sector.

• Upstart developed an AI-powered loan origination platform, and the company could have an addressable market worth $25 trillion per year.

• DigitalOcean is helping small and midsize businesses tap into the AI opportunity, and this part of its business is growing like a weed.

• 10 stocks we like better than Upstart ›

The artificial intelligence (AI) revolution is carrying serious momentum right now, and it's showing no signs of slowing. Data center hardware suppliers like Nvidia are experiencing more demand than they can possibly supply, as the latest AI models require significantly more computing power than their predecessors.

As AI software becomes smarter and more capable, companies like Upstart Holdings (NASDAQ: UPST) and DigitalOcean (NYSE: DOCN) are likely to experience accelerating growth. In fact, here's why investors with a spare $1,000 (money they don't need for immediate expenses) might want to split it equally between shares of Upstart and DigitalOcean, and hold on to them for the long term.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

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1. The case for Upstart

Banks have relied on Fair Isaac's FICO credit scoring system to measure the creditworthiness of potential borrowers for more than 30 years. However, it only takes into account a handful of factors, like a person's existing debts and their repayment history, so Upstart believes it's outdated.

The company developed an AI-powered algorithm that can analyze a whopping 2,500 data points on each potential borrower to get a better sense of their ability to repay a loan, and it can deliver instant, fully automated approvals 92% of the time. It would take days or even weeks to parse the same amount of data using traditional human-led assessment methods.

Upstart specializes in unsecured personal loans, automotive loans, and home equity lines of credit (HELOCs). The company doesn't lend any money itself, but rather it originates loans on behalf of banks, credit unions, and car dealers. It originated 372,599 approvals across all segments during the second quarter of 2025 (ended June 30), which was up by a whopping 159% from the year-ago period. The loans had a dollar value of $2.8 billion, which was a three-year high.

The surge in Q2 originations resulted in $257 million in revenue, representing a year-over-year increase of 102%. It marked the fourth consecutive quarter in which revenue growth accelerated, and it places the company on track to deliver more than $1 billion in annual revenue for the very first time this year.

Simply put, Upstart's business is on the road to recovery right now after a brutal couple of years between 2022 and 2024, marred by a two-decade high in interest rates that crushed demand for credit. Rates have started to come down, and Wall Street anticipates three cuts by the Federal Reserve before this year is over, which will help Upstart build on its recent momentum.

Upstart CEO Dave Girouard thinks AI will replace all human-led loan assessment methods over the next decade, leaving a $25 trillion pool of annual originations up for grabs for AI-powered algorithms. This could translate to $1 trillion in annual fee revenue, so Upstart has an enormous market opportunity ahead.

2. The case for DigitalOcean

The cloud computing industry is dominated by tech giants like Amazon, Microsoft, and Alphabet, but they typically fight over the largest customers because they have the deepest pockets. DigitalOcean, on the other hand, exclusively serves small and midsize businesses (SMBs). It offers cheap pricing, highly personalized service, and a user-friendly dashboard, which is ideal for enterprises with limited technical expertise.

DigitalOcean can help SMBs store data, host websites, deliver video streaming services, develop software, and more. But the company also has an expanding portfolio of services designed to help businesses deploy AI software. It operates data centers powered by graphics processing units from top suppliers like Nvidia, and it allows SMBs to start with just one chip and scale up as necessary, which is perfect for small AI workloads like customer service chatbots.

DigitalOcean also launched a new AI platform called Gradient this year. It's a cloud-based workspace with all the tools an SMB needs to develop AI software, including ready-made large language models from leading providers like OpenAI, Meta Platforms, and Anthropic, which they can use to accelerate their progress. Gradient can also be used to create AI agents, which can be trained to assist with tasks like data analysis and even writing computer code.

According to management's most recent guidance, DigitalOcean is on track to generate up to $890 million in revenue in 2025, which would be a record high. AI will be a critical part of the long-term growth story here -- while the company's total revenue grew by 14% year over year during the second quarter, its AI revenue soared by more than 100%.

Investors have an opportunity to scoop DigitalOcean stock up at a very attractive level right now. It's trading at a price-to-sales (P/S) ratio of just 4.3, which is a near-50% discount to its average of 8.5 since going public in 2021, so this could be a great long-term entry point.

Should you invest $1,000 in Upstart right now?

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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, DigitalOcean, Meta Platforms, Microsoft, Nvidia, and Upstart. The Motley Fool recommends Fair Isaac and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.