2 No-Brainer Stocks to Profit Off the AI Boom

Artificial intelligence (AI) continues to promise great returns for long-term investors in companies putting it to use in their businesses. Every industry is exploring how this technology can boost efficiency and innovation. This is expected to boost the global economy by trillions of dollars in the coming years.

Here are two top tech stocks to buy that benefit from growing investment in AI services and hardware.

Image source: Getty Images.

1. Oracle

Oracle (NYSE: ORCL) stock recently surged to a new high following an impressive earnings report for its fiscal fourth quarter. The stock has had an incredible run over the past few years, but its accelerating growth in cloud services makes the stock a compelling buy even at these all-time highs.

Oracle is a leader in offering applications and database services for enterprise. Its competitive moat is based on a comprehensive suite of services that work well together, and this integration of services is driving strong demand for its cloud and AI offerings.

Cloud revenue grew 27% year over year last quarter, and it's expected to accelerate. Management projects fiscal 2026 cloud revenue growing over 40% compared to fiscal 2025. This is causing analysts to raise their full-year earnings estimates. Earnings per share are now projected to reach $6.75 for fiscal 2026 and climb to $9.92 by fiscal 2028.

Oracle is in a strong competitive position because it offers companies the ability to use their own data with popular AI large language models while maintaining security.

Revenue from cloud infrastructure services grew 52% over the year-ago quarter, and management expects this business to accelerate over the next year. Its involvement in the Stargate project with OpenAI, which promises to build $500 billion worth of AI infrastructure in the U.S. over the next four years, supports attractive growth prospects.

Oracle stock looks expensive from a valuation perspective, with the stock trading at a high multiple of earnings. But it's also seeing accelerating growth. The stock should climb higher over the next few years as it rides the wave of investment pouring into AI cloud services.

Image source: Getty Images.

2. Broadcom

Strong demand for top cloud providers is good news for Broadcom (NASDAQ: AVGO), which supplies semiconductors, software, and networking products for data centers. It also supplies chips for other markets, including smartphones.

Broadcom has a great record of delivering strong growth and returns to shareholders. Over the last 10 years, revenue and earnings grew at an annualized rate of 28%. This reflects management's strategy of investing in the most attractive opportunities that offer profitable long-term growth. Right now, it's focusing on the demand for AI infrastructure.

Broadcom's custom AI silicon, including application-specific integrated circuits (ASICs) and eXtreme processing units (XPUs), is seeing robust demand. AI semiconductor revenue grew 46% year over year last quarter, reaching $4.4 billion, or 30% of the company's total revenue.

Data centers are aggressively investing in chips and networking to prepare for the shift from AI training to inferencing, where models make predictions from new data. Management expects this shift to lead to accelerating demand for XPUs through 2026.

Broadcom's networking products for AI delivered even higher growth, surging 170% year over year. Its new Tomahawk 6 Ethernet switch can deliver 102.4 terabits per second of data capacity. This will drive higher performance in training the next wave of cutting-edge AI models.

The stock usually trades at an expensive-looking earnings multiple. The average price-to-earnings (P/E) ratio is 55 since 2020. On a forward earnings basis, the forward P/E currently sits at 37. This suggests that there is more upside for the stock over the next year, barring a severe recession or anything that might disrupt spending in the semiconductor industry. Given Broadcom's history of delivering strong growth, it should be a solid stock to profit from the AI boom.

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John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.