3 Big Tech AI Stocks to Buy and Hold Forever
TradingKey - When we talk about stock market themes popular with investors right now, Artificial Intelligence (AI) is one of the most powerful. Unlike a lot of other thematics out there, though, AI has staying power. It’s no longer just a niche sector – it’s transforming industries everywhere, from retail to transportation.
As companies harness the potential of AI to optimise operations, develop cutting-edge technologies, and push the boundaries of innovation, investors have a unique opportunity to capitalise on this seismic shift.
However, among the Big Tech’s “Magnificent Seven” stocks, they’re not all created equal when it comes to AI. Some have made much more progress in AI than others, with this showing up in their numbers as well.
So, for anyone looking to tap into AI’s transformative power, here are three Big Tech AI stocks to buy and hold forever.
Microsoft
Everyone knows about Microsoft Corporation (NASDAQ: MSFT) and its powerful position in the cloud computing arena. But it has also positioned itself as a cornerstone of the AI ecosystem through its Azure cloud platform and its various strategic investments in AI research.
Microsoft’s partnership with OpenAI, the organisation behind ChatGPT, has been a real game-changer for the company. By embedding OpenAI’s models into its Azure platform, it has been able to provide its corporate clients with access to generative AI capabilities that power applications in content creation, customer service, and data analysis.
One great example of this is Microsoft 365 Copilot as a virtual AI assistant for its Office 365 users. This feature brings generative AI to widely-used office tools like Word and Excel and is starting to already reshape how professionals work.
On the cloud side, Azure’s AI-driven services have contributed significantly to Microsoft’s Intelligent Cloud segment, which has seen double-digit revenue growth in recent quarters. During its latest Q1 FY2025 earnings, the overall Azure service saw 33% year-on-year growth, with AI contributing 12% of that growth.
Microsoft’s Intelligent Cloud financial Q1 FY2024 to Q1 FY2025
Source: Microsoft Q1 FY2025 earnings call slides
Microsoft’s multi-pronged AI strategy—encompassing cloud infrastructure, partnerships, and enterprise solutions—gives it an unmatched advantage in scaling AI applications across industries. As businesses increasingly adopt AI, Microsoft’s infrastructure and software ecosystem position the company as a big winner given its “first-mover” advantage.
Nvidia Corp
Of course, no discussion about AI leadership would be complete without Nvidia Corporation (NASDAQ: NVDA). As the dominant supplier of graphics processing units (GPUs) (graphics processing units), the cutting-edge chips required for processing AI algorithms and meeting the massive demand for computing power, Nvidia has become the backbone of AI computing and the accompanying revolution.
GPUs are essential for training and running AI models, and Nvidia’s hardware is unmatched in performance and efficiency. In fact, it has 80% of the market for the chips required to run AI algorithms with rivals Advanced Micro Devices (NASDAQ: AMD) and Intel Corporation (NASDAQ: INTC) way behind Nvidia. The company also recently launched its next-gen AI chip, called “Blackwell” and the early signs are that demand from clients is as hot as ever.
Beyond hardware, Nvidia’s unique software ecosystem solidifies its leadership and widens its moat in AI. Its CUDA and Nvidia AI Enterprise systems enable developers to deploy and optimise AI workloads seamlessly. This combination of cutting-edge hardware and robust software creates a virtuous “flywheel” effect where Nvidia continues to dominate as AI adoption scales.
In its latest earnings report, Nvidia’s data centre revenue soared 112% year-on-year to US$30.8 billion, reflecting surging demand for its AI-focused products. This trend isn’t temporary. With the proliferation of AI applications in industries like healthcare, automotive, and robotics, Nvidia’s growth runway remains long and (potentially) even more lucrative.
Nvidia’s data centre revenue (FY2020 to YTD FY2025)
Source: Nvidia investors presentation, November 2024
For investors, Nvidia represents more than just a semiconductor company. It’s a critical enabler of the AI revolution, with its state-of-the-art chip designs powering what everyone else is doing in the space.
Tesla
While Tesla Inc (NASDAQ: TSLA) is best known for its electric vehicles (EVs), the company is a leader in applying AI to revolutionise mobility and energy systems. Tesla’s advancements in autonomous driving technology – just think of its soon-to-be-launched Cybercab – and its use of AI across manufacturing and product design set it apart from legacy automakers.
Tesla’s Full Self-Driving (FSD) software is a testament to the company’s AI capabilities. The system, which relies on vast amounts of real-world driving data, uses AI models to interpret road conditions, predict traffic behaviour, and navigate complex environments.
Unlike many competitors that depend on lidar or external sensors, Tesla’s approach is vision-based and driven by neural networks and advanced machine learning algorithms that have digested millions of hours of driving data.
Tesla’s AI efforts extend beyond software. The company has developed its own in-house chip, the Dojo supercomputer, to train its AI models more efficiently. Dojo is designed to process video data from Tesla’s fleet, enabling faster and more accurate model training. This vertically-integrated approach – very similar to how it has built its in-house manufacturing capabilities – gives Tesla a significant edge in building scalable yet cost-effective AI systems.
In addition, Tesla is leveraging AI to optimise its energy products, including solar panels and battery storage systems. By using AI to forecast energy consumption and production, Tesla’s products – from its EVs to Megapack battery storage systems – are becoming smarter and more efficient, enhancing their value to customers and utilities.
For investors, Tesla’s AI-driven initiatives are a key differentiator that support its long-term vision of reshaping the worlds of both transportation and energy. Given its already-successful track record, it’s clear that the company can go on to do bigger and better things in AI given how early we are in the EV and clean energy revolution.
Buy only the best AI stocks
All three of these Big Tech AI-focused stocks; Microsoft, Nvidia, and Tesla, each bring something unique to the AI space. Microsoft is democratising access to AI through its cloud and enterprise solutions, Nvidia powers the AI revolution with its unique chips and software, and finally Tesla is leveraging AI to disrupt traditional industries that are ripe for disruption.
What unites these companies is their ability to integrate AI into their broader business strategies and actually generate revenue from these initiatives. For long-term investors, these stocks offer targeted exposure to the transformative potential of AI. These “megacap” companies are also considered more reliable and give investors a better long-term “buy and hold” story in AI than speculative small-cap stocks.
