Artificial Intelligence (AI) is transforming the business landscape, with companies rapidly investing to increase productivity and develop innovative applications. This trend presents significant growth opportunities for investors over the next decade as they seek to identify companies that are well-positioned to benefit.

Let’s explore two companies leading the AI charge that could prove to be rewarding long-term investments.

Palantir Technologies: Driving Data Analytics Innovation

Palantir Technologies (NYSE: PLTR) has become synonymous with AI-powered data analytics, servicing clients ranging from military organizations to Fortune 500 companies. Although its stock has experienced volatility, it has surged approximately 230% since hitting a low in 2022.

The recent performance reflects Palantir’s strong financial results, with a quarterly revenue of $634 million, which has tripled over five years. The company achieved a 21% revenue growth year-over-year in the first quarter, fueled by a remarkable 69% increase in customer count, indicating potential for further growth.

While Palantir’s U.S. government revenue grew by a modest 12%, its U.S. commercial revenue saw a robust 40% year-over-year increase. Dresner Advisory Services recognized Palantir as a top provider in AI and data science, further validating its strong position in the market.

Notably, retailers like Lowe’s are leveraging Palantir’s platform to enhance customer service, while Archer Aviation applies it for dynamic flight routing and predictive maintenance. Such diverse applications underscore Palantir’s flexibility and significance in the AI landscape.

Importantly, successful software companies must convert revenue growth into profits. Palantir appears to excel in this area, with management projecting adjusted operating income between $868 million and $880 million this year, on revenues exceeding $2.6 billion. This profitable growth lays the foundation for significant investor returns.

Tesla: Everyday AI Innovations and Future Opportunities

The electric vehicle (EV) market has faced challenges this year, with pressures from rising interest rates and fierce competition. Despite a revenue dip reported by Tesla (NASDAQ: TSLA) in the first quarter, the company’s investments in AI set it apart within the automotive industry.

During a recent earnings call, CEO Elon Musk disclosed that Tesla is in talks with a major automaker to license its full self-driving (FSD) software. With the potential for 29% to 54% of new vehicles to be electric by 2050, Tesla could unlock considerable opportunities in software licensing.

Tesla has emerged as one of the most profitable automakers globally, achieving $13 billion in net profit over the last year. This financial strength enables the company to invest in premium AI training chips from Nvidia, advancing its AI model capabilities.

The improvements in Tesla’s FSD technology align with the planned August unveiling of the Cybercab, anticipated to tap into the rapidly expanding robotaxi market projected to grow from $400 million in 2023 to over $45 billion by 2030.

Overall, Tesla’s ventures into AI, including its work on humanoid robots, may yield additional revenue streams not yet integrated into its stock valuation.

Investment Considerations

As potential investors evaluate opportunities in AI, it is essential to note that the Motley Fool Stock Advisor recently identified its top 10 stock picks for investors—remarkably, Palantir Technologies did not make the list. This suggests there may be more compelling investment options available that could enhance return potential in the coming years.

Consider the historical performance of Nvidia, which was first featured in Stock Advisor on April 15, 2005. A $1,000 investment then would be worth an astounding $671,728 today!

The Stock Advisor program provides a roadmap for successful investing through portfolio-building guidance, regular updates, and new stock picks each month, having quadrupled the return of the S&P 500 since its inception in 2002.