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Consistently buying shares of growing companies can put you on the path to building great wealth. One of the best areas to look for growth stocks right now is artificial intelligence (AI) -- a market expected to grow substantially over the next decade.
If you have a few hundred dollars you don't need for paying bills or reducing debt, here are two great stocks to help you profit from this opportunity.
1. Advanced Micro Devices
Advanced Micro Devices (NASDAQ: AMD) should benefit from the buildout of data centers, which provide the computing power needed for AI to work. AMD sees a $500 billion opportunity for its data center chip business, and investors have a chance to buy the stock at an attractive valuation right now.
The shares are currently trading 45% off their previous high. While AMD's data center revenue soared 122% year over year in the third quarter, some of AMD's smaller business units, including chips used in industrial markets and video game consoles, didn't perform as well and are still struggling with macroeconomic headwinds. The outlook for these segments has been very soft, which has contributed to the stock's decline over the last year.
But the stock won't stay down for long. The growing demand for graphics processing units (GPUs) was enough for AMD's total revenue to increase 18% year over year in the third quarter. AMD is also seeing robust demand for its Ryzen consumer PC processors. The other segments will eventually recover and provide an additional tailwind for the company.
AMD has one advantage that should benefit the company's growth over the next several years. Its data center GPUs are designed with high memory capacity, which will be useful for inferencing -- the next phase of AI development that will allow for real-time data processing and allow computers to think more on their own.
Analysts expect AMD's earnings to grow 44% on an annualized basis over the next few years, yet the shares trade at a market-average forward price-to-earnings multiple of 25. The stock is a no-brainer buy at this valuation level.
2. Lam Research
Another brilliant stock that could rocket higher in the coming years is Lam Research (NASDAQ: LRCX). Lam is a leader in selling equipment and services to the semiconductor industry for manufacturing chips. It's the pick-and-shovel supplier of the AI gold rush.
It's a very profitable business, and the stock has been a winner for long-term shareholders. Lam's earnings grew more than 20% per year over the last 10 years. With AI requiring more complex chip manufacturing processes, the company has a bright future.