2 Top AI Stocks Down 28% or More to Buy and Hold for 10 Years
Two top AI stocks have experienced a significant drop of 28% or more, making them appealing options for long-term investment. Despite the recent decline, experts suggest that these stocks could be lucrative choices to hold onto for a decade. Investors looking to capitalize on the potential growth of artificial intelligence technology may find these discounted stocks to be attractive opportunities. With a long-term perspective in mind, buying and holding these AI stocks could yield substantial returns over the next ten years.
Leading artificial intelligence (AI) companies are seeing growing demand that points to a lucrative opportunity. Investors who keep a long-term perspective and take advantage of market dips to buy shares of competitively positioned companies at discounts will be in the best position to profit from this opportunity.
Nvidia
Nvidia's breakneck innovation in the AI chip market has powered its way toward the top of the semiconductor industry. It controls over 90% of the share of graphics processing units (GPUs) used in servers for AI workloads, according to IDC, making this chip leader still one of the best ways to profit from the AI opportunity. Nvidia has tailored its GPU technology to meet the needs of different industries, including automotive, healthcare, data centers, and more. Its chips are used for everything from training the AI models for OpenAI's ChatGPT to powering a PC for running video games.
Nvidia is currently ramping its new Blackwell semiconductor chips and AI computing platform, which is 2.5 times more powerful than its previous-generation Hopper GPUs. Nvidia's GPUs are considered the gold standard with 5.9 million developers using its CUDA programming platform. This allows AI researchers and other customers to build applications optimized specifically for Nvidia's GPUs, cementing its lead in the industry.
Nvidia's market leadership and innovation have enabled it to price its chips to earn extremely high profits. With $60 billion of free cash flow on $130 billion of revenue last year, Nvidia has the resources to stay on the cutting edge of GPU innovation. Analysts expect Nvidia's revenue to grow 57% this year, with long-term earnings growth projected at 36% on an annualized basis. With shares trading down about 26% from recent highs and at 23 times this year's consensus earnings estimate, investors are getting solid value that could lead to market-beating returns over the next 10 years.
ServiceNow
ServiceNow is a leader in business automation software. Despite reporting 21% year-over-year revenue growth in Q4 2024, the stock recently faced a 33% drop, presenting a great buying opportunity. The strong demand for its AI platform is not yet fully reflected in the share price. Many companies use ServiceNow to streamline business workflows and increase efficiency, with over 8,400 customers, including 85% of the Fortune 500.
ServiceNow is well positioned to benefit from the exploding demand for agentic AI software, where applications are smart enough to understand what tasks need to be performed to solve a problem without human input. Being a subscription-based business, the recurring revenue from subscriptions allows ServiceNow to generate significant cash flow. In 2024, it generated $3.3 billion in free cash flow on $11 billion of revenue.
The company is at the forefront of the AI opportunity, with companies increasingly investing in Nvidia's GPUs to deliver automated applications similar to what ServiceNow offers. Deals for its Now Assist AI software grew 150% quarter over quarter in Q4. The company's subscription revenue reached $10.6 billion last year, with management expecting it to hit $15 billion in 2026. Analysts anticipate the company's earnings to grow 30% on an annualized basis in the coming years.
Investing in shares of ServiceNow today is expected to yield excellent returns by 2035, as automated software becomes integral to how businesses operate.