This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
At this point, it seems highly likely that artificial intelligence (AI) is on track to be the most impactful new technology since the internet. While the progression of the tech trend will certainly bring some twists and turns for investors, there's a good chance that the AI revolution is still in relatively early innings.
Companies with heavy exposure to AI have been some of the market's best performers in recent years and helped push major indexes to new highs, and long-term investors still have opportunities to score wins with top players in the space. With that in mind, read on to see why two Motley Fool contributors think that two companies, in particular, with leading positions in AI will stand as the world's most valuable businesses five years from now.
The biggest name in AI today, and probably tomorrow
Jennifer Saibil (Nvidia): Nvidia (NASDAQ: NVDA) has rocketed to the point where it is now the world's most valuable company, passing Microsoft and Apple along the way. There's good reason to expect it will still be at the top of the podium five years from now.
A big reason for expectation is that Nvidia is growing much faster than Microsoft and Apple, as well as the rest of the world's most valuable companies. Revenue increased 69% year over year in its fiscal 2026 first quarter (ended April 27), and management is guiding for a 50% increase in the second quarter. It has incredibly high gross margins, which came in at 71.3% in the first quarter without a one-time charge, and the net profit margin was 52% in the quarter.
Nvidia has a massive opportunity over the next few years as AI gets incorporated more into what people do. It partners with most of the major AI companies, like Amazon (NASDAQ: AMZN) and Microsoft, and as they roll out their AI platforms, there's an even greater demand for Nvidia's products. The demand for data centers alone, which AI companies use to help power generative AI operations, is exploding. Nvidia's data center revenue set the pace for the company overall, increasing 73% year over year in the first quarter.
According to Statista, the AI market is expected to increase at a compound annual growth rate of 26% over the next five years, surpassing $1 trillion by 2031. As the leader in the chip industry, with the most powerful products and as much as 95% of the market share, it will be one of the main beneficiaries of that growth.
Nvidia keeps launching new and more powerful chips to handle the increasing demand and power load. It's still bringing out the Blackwell technology that it launched last year, and it's seeing a huge need for its products to drive the inference part of generative AI. Nvidia management says its GPUs are being incorporated into 100 of what it calls AI factories (AI-focused data centers) under development in the first quarter, double last year's number, and the number of graphics processing units powering each factory doubled as well. Management expects this segment of the business to continue growing at a rapid pace. It's now launching Blackwell Ultra, a more powerful tool for AI reasoning, which is the next step after inference and requires greater capacity.
CEO Jensen Huang envisions a future not too far off where AI is used in everything we do, and Nvidia is going to play a huge role in that shift.
Amazon has a massive AI-driven opportunity ahead
Keith Noonan (Amazon): As the leading provider of cloud infrastructure services, Amazon stands to be a major beneficiary of the AI revolution. The development, launch, and scaling of artificial intelligence applications stands to be a powerful tailwind for the company's Amazon Web Services (AWS) cloud business, and the Bedrock suite and other generative AI tools should help to encourage clients to continue building within its ecosystem.
With AWS standing as Amazon's most profitable segment by far, AI-related sales for the segment should help to drive strong earnings growth over the next five years. Artificial intelligence being integrated into the company's fast-growing digital advertising business should also help to improve targeting and demand and create another positive catalyst for the company's bottom line. But there's an even bigger AI-related opportunity on the table -- and it could make Amazon the world's most valuable company within the next half-decade.
Even though AWS generates most of Amazon's profits, the company's e-commerce business still accounts for the majority of its revenue. The catch is that e-commerce has historically been a relatively low-margin business. Due to the emphasis that Amazon has placed on expanding its retail sales base and the high operating costs involved with running the business, e-commerce accounts for a surprisingly small share of the company's profits despite the massive scale of the unit. That will likely change with time.
With AI and robotics paving the way for warehouse and factory automation and potentially opening the door for a variety of autonomous delivery options, operating expenses for the e-commerce business are poised to fall substantially. There's admittedly a significant amount of guesswork involved in charting how quickly this transformation will take shape, but it's a trend that's worth betting on.
Given the incredible sales base that Amazon has built for its online retail wing, margin improvements look poised to unlock billions of dollars in fresh net income for the business. If AI-driven robotics and automation initiatives start to accelerate substantially for the company over the next five years, the e-commerce side of the business will quickly command a much higher valuation premium. If so, Amazon has a clear path to being one of the world's most valuable companies.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
