If you have around $3,000 at hand, consider investing in these three Artificial Intelligence (AI) stocks for a long-term hold:

If you have around $3,000 at hand, consider investing in these three Artificial Intelligence (AI) stocks for a long-term hold:

In 2024, synthetic intelligence (SI) was a significant trend in the market, with numerous stocks realizing significant gains due to this emerging technology. While SI seems to be still in its infancy, there's substantial evidence suggesting it will serve as a robust driver of growth in the coming years. This is largely due to major tech corporations, together with well-financed start-ups like OpenAI and Elon Musk-supported xAI, continuing to enhance their investments, aiming to capitalize on what they perceive as a generational chance.

Given this scenario, let's explore three SI stocks that are currently trading at attractive valuations. If you have $3,000 available to invest, not earmarked for monthly expenses, debt payment, or strengthening an emergency fund, you should consider buying and holding one (or all) of these stocks for the long term.

1. Nvidia

When it comes to SI-related stocks to invest in, Nvidia (NVDA 2.99%) is a name that demands attention. Over the past few years, the stock has prospered dramatically, yet it still presents an attractive valuation with a forward price-to-earnings (P/E) ratio of roughly 31 estimated for 2025, and a price-earnings-to-growth (PEG) ratio approximately 0.98. A PEG ratio less than 1 is generally viewed as undervalued, but growth stocks typically carry PEG ratios exceeding 1.

Nvidia has established a moat through its CUDA software, which has enabled it to secure around 90% market share in the graphic processing unit (GPU) market. With competition and valuation concerns minimized, the primary question surrounding Nvidia is whether SI infrastructure spending will continue at its current rapid pace.

Large language models (LLMs) require increasingly more GPUs as they progress, so the question arises: Is there a point at which these models become capable enough for their creators to scale back on their investments? To believe they will, one must presume that tech giants like Microsoft, Amazon, Alphabet (GOOGL 0.07%) (GOOG 0.10%), Meta Platforms, and xAI, among others, will be satisfied with not having the best SI model available.

If you don't think they will be content, Nvidia is a worthwhile investment.

2. Alphabet

In part due to some uncertainty following an antitrust ruling, Alphabet has become the most affordable of the leading tech companies driving SI infrastructure spending, trading at a forward P/E ratio of merely 19 times subsequent year's analyst estimates.

However, Alphabet is signaling its potential to become a significant SI winner. Its cloud computing division is seeing rapid revenue growth, and the high-fixed-cost business has achieved profitability. Last quarter, Google Cloud was the fastest-growing of the three major cloud providers, with its revenue expanding 35% year over year to $11.4 billion, and operating income soaring from $266 million a year ago to $1.95 billion. Alphabet is leading the way in customized application-specific integrated circuits (ASICs) for SI, and it credits the combination of its customized tensor processing units (TPUs) with GPUs in helping to reduce inference processing times and lower costs. It also claimed that customers are drawn to its AI language model Gemini's robust multimodal capabilities.

Simultaneously, the company is leveraging AI to better comprehend its users and connect them with advertisers. Its use of AI also opens up additional monetization opportunities with various ad formats. The company historically only served ads to about 20% of its searches, so this represents a significant opportunity.

Overall, Alphabet is well-positioned to reap the benefits of SI, and I believe the company could be worth more if it were dismantled, as the values of Google Cloud; its self-driving unit, Waymo; and YouTube would likely fetch higher multiples as separate entities given their strong positions in their respective markets.

3. Workday

Trading at a forward price-to-sales (P/S) ratio of 7.2 and a forward P/E ratio of under 31 based on analysts' fiscal 2026 estimates, Workday (WDAY -2.40%) is an attractively valued SaaS stock just beginning to reap the rewards of SI.

The company has been utilizing AI to drive growth, reporting last quarter that 30% of its customer expansions in the quarter came from adopting AI solutions. It highlighted that products such as Recruiter Agent and Talent Optimization were experiencing strong demand. Additionally, management anticipates its forthcoming Optimize Agent solution could be a "game changer," as it is able to recognize bottlenecks and inefficiencies.

Workday is also looking to aggressively target the federal government vertical, where it sees an opportunity to replace less efficient and expensive systems that are time-consuming to maintain. With a new administration coming into power with a stated focus on cost reductions and efficiency, this should prove to be an appealing opportunity.

Workday aims to grow revenue by a mid-teens percentage while expanding its operating margin. If achieved, this should be a favorable combination that propels its stock higher over the long term.

In the strategy to invest in SI-related stocks, Alphabet (GOOGL 0.07%, GOOG 0.10%) presents an affordable option with a forward P/E ratio of only 19 times subsequent year's analyst estimates. However, Alphabet's cloud computing division is witnessing rapid revenue growth, and its high-fixed-cost business has achieved profitability, making it a potential significant SI winner.

As for financing SI investments, major tech corporations and well-funded start-ups, such as OpenAI and Elon Musk-supported xAI, continue to pour money into enhancing their investments in this emerging technology. This substantial financial commitment indicates the perception of SI as a generational opportunity for growth and profit.

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