Goldman Sachs notes that the tech sector has been a driving force in the U.S. stock market since 2010, generating 40% of the stock market’s gains over the past 14 years.
Since 2010, many tech stocks have made outsized gains. For example, if you invested $1,000 in Advanced Micro Devices, it would now be worth more than $23,000. Other companies, including Microsoft, Amazon, and Netflix, were also multibaggers during this period, while NVIDIA posted impressive gains driven by multiple catalysts, the most recent of which was artificial intelligence (AI).
AMD chart
With AI still in its early stages of growth, Bloomberg predicts the technology could generate $1.3 trillion in revenue in 2032, more than this year’s forecast of $137 billion. So if you want to build a million-dollar portfolio, you might want to buy AI-focused companies and hold them for the long term.
In this article, we take a closer look at two stocks that can deliver outstanding returns to investors and soar over the long term, while contributing to multi-million dollar portfolios with AI-powered growth.
1. Palantir Technologies
Companies like Nvidia are in the spotlight with powerful chips that can train AI models. However, these models ultimately need to be deployed in real-world applications. Palantir Technologies (NYSE: PLTR) uses its Artificial Intelligence Platform (AIP) to help customers do just that.
AIP users can build generative AI applications, integrate large-scale language models (LLMs) into their workflows, and deploy prebuilt AI applications. Palantir has wisely run “bootcamps” to show customers how to deploy generative AI to fit their business needs. This strategy won us a large contract.
Customers signing up for AIP are also looking to deploy the platform across their businesses, creating a land expansion effect that will significantly increase Palantir’s commercial customer base and contract value. It is reported that The company’s share of the business grew 55% year-over-year in the second quarter, outpacing the 41% growth in its overall customer base, which includes government customers.
The company recorded $946 million in total contract value in the second quarter, an increase of 47% year-over-year. AI also increased net retention rate (NRR) by 300 basis points to 114%. (A reading above 100% means your existing customers are spending more money each year.)
Management said the metric does not yet fully capture the acceleration of its U.S. commercial business over the past year because it does not include revenue from new customers acquired in the past 12 months.
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The company’s remaining deal value increased 26% year-over-year to $4.3 billion, a further indicator of the impact AI is having on its business. This metric refers to the total residual value of Palantir’s contracts at the end of the reporting period. Given that the company generated $2.5 billion in revenue over the subsequent 12 months, the significant value left on the deal indicates healthy future revenue growth.
Palantir said its adjusted operating margin rose 12 points to 37% in the second quarter due to “strong unit economics of our business.” Translation: Thanks to AIP, the company spends more on its products and generates more profit from each customer.
Consensus estimates project Palantir’s annual earnings growth rate of 57% over the next five years. Additionally, the global AI market is expected to expand over the next five years, potentially allowing the company to maintain its healthy revenue growth for a long time.
So if you’re looking for an AI stock with long-term potential to help you build a $1 million portfolio, you might want to take a closer look at Palantir before its stock price skyrockets.
2. Oracle
The software platform that Palantir provides to its customers runs on cloud infrastructure provided by companies such as Oracle (NYSE: ORCL). The two companies already have a partnership, with Palantir using Oracle’s distributed cloud and AI infrastructure for things like its AIP. And it’s not the only company using Oracle’s cloud to reach customers.
Companies have been renting Oracle’s cloud infrastructure for training AI models, apart from offering cloud-based AI services on cloud platforms. Demand on Oracle’s cloud infrastructure is high and exceeds availability. Management said on the September earnings call that the Infrastructure Cloud Services business achieved annualized sales of $8.6 billion, driven by a 56% increase in consumption.
Oracle generated just under $54 billion in revenue over the past year. Therefore, the increasing demand for AI-powered cloud infrastructure is starting to bring about major changes. This strong demand is why remaining performance obligations (RPO) reached $99 billion in the first quarter of fiscal 2025, up 53% year-over-year.
RPO refers to the total value of a company’s contracts to be fulfilled in the future. Therefore, faster growth in this metric when compared to Oracle’s revenue growth in the previous quarter indicates stronger future revenue growth.
Goldman Sachs estimates that AI-powered infrastructure as a service will generate $580 billion in revenue by 2030. This means there is a huge opportunity for Oracle. Consensus forecasts are for growth to accelerate, following a 6% increase in revenue to $53 billion in the previous fiscal year.
ORCL’s earnings forecast graph for next fiscal year
Given the huge opportunity it can address, Oracle is likely to maintain strong growth in the long term. Finally, investors are getting a good deal on this AI stock, as the stock trades at 28 times forward earnings, compared to the average price-to-earnings ratio of 46 times for the U.S. tech sector. It seems suitable if you want to build a million dollar portfolio.
Should you invest $1,000 in Palantir Technologies right now?
Before buying Palantir Technologies stock, consider the following:
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John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Harsh Chauhan has no position in any stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Goldman Sachs Group, Microsoft, Netflix, Nvidia, Oracle, and Palantir Technologies. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
2 Millionaire-Maker Artificial Intelligence (AI) Stocks was originally published by The Motley Fool.
