Artificial intelligence (AI) has been one of the hottest trends in the technology sector over the past couple of years, and it’s no surprise since this disruptive technology has had a positive impact on several businesses in several sectors.
McKinsey and Company noted last year that Generative AI has the potential to add between $2.6 trillion and $4.4 trillion to the global economy by increasing productivity in sectors such as banking, retail, marketing and factory automation. This is why buying and holding strong AI companies for a long time could help investors get rich.
Such a strategy will not only allow investors to benefit from the growing adoption of AI, but also benefit from the power of artificial intelligence. composition this could help them significantly increase the value of their investments. As a result, investors looking to build a diversified portfolio million dollar wallet may consider buying AI stocks such as Palo Alto Networks (PANW -1.36%) And C3.ai (AI 2.51%)two companies that are poised to capitalize on multi-billion dollar AI-related opportunities.
Let’s take a look at why these two names could be ideal buys for investors looking to become millionaires in the long run.
1. Palo Alto Networks
The cybersecurity industry has long adopted AI-driven tools to help organizations strengthen their defenses against malicious actors. From generative AI assistants that help security analysts save time when performing tasks such as analyzing alerts, automating the threat detection and prevention process, analyzing coding and looking for potential vulnerabilities, cybersecurity companies such as Palo Alto Networks offer multiple tools to their clients. customers.
Morgan Stanley points out that demand for AI-based cybersecurity tools could reach $135 billion annually in 2030, up from just $15 billion in 2021. Not surprisingly, cybersecurity specialists such as Palo Alto have been working to integrate AI-based tools in their offerings so they can win more business. On his last earnings conference callPalo Alto management noted that its platform secures “more than 750 AI applications, a volume that we believe leads the industry, and this number is growing every day.”
The company also highlights that its annual recurring revenue (ARR) from AI-related offerings was $250 million in the first quarter of fiscal 2025 (which ended October 31). It won’t be surprising to see this figure increase in the long term, given the huge addressable opportunity offered in the AI cybersecurity market, as well as the fact that Palo Alto is looking to push the boundaries further.
For example, Palo Alto added more than 400 machine learning modules to its AI platform last quarter to improve the autonomous capabilities of its security operations center. Such developments explain why the company has gradually built a strong revenue pipeline that should allow it to maintain healthy growth levels.
Palo Alto ended the first fiscal quarter with remaining performance obligations (RPOs) of $12.6 billion. This metric, which refers to the total value of a company’s contracts that will be executed in the future, increased by 20% year over year. That’s better than the company’s 14% year-over-year revenue growth last quarter, to $2.1 billion.
The good news is that Palo Alto expects its RPO to increase between 19% and 20% for the full year, to a range of $15.2 billion to $15.3 billion. That would be higher than the 14% revenue growth the company expects for the full year, in a range of $9.12 billion to $9.17 billion. Additionally, the strong RPO measure suggests why analysts expect Palo Alto’s growth to pick up slightly over the next two fiscal years.
PANW revenue estimates for the current fiscal year data by YGraphics
The company’s improving top-line growth should also translate into stronger bottom-line growth. This is clear from the following chart, which indicates an acceleration in earnings growth in a few years.
PANW EPS Estimates for the Current Fiscal Year data by Y Charts
Given that AI presents a long-term growth opportunity for cybersecurity companies, Palo Alto appears to be in a good position to maintain its impressive growth over the long term. As such, it won’t be surprising to see this stock generate healthy gains for investors in the future, which is why it appears to be an ideal choice for investors looking to build a million-dollar portfolio .
2. C3.ai
C3.ai is an enterprise AI software company that delivers more than 100 AI applications to clients across multiple industries ranging from financial services to manufacturing, oil & gas, chemicals and many more. Additionally, C3.ai also offers an app development platform that customers can use to develop custom apps based on their needs.
The company therefore operates in a massive market. Market research firm IDC predicts that the AI software market could generate a massive $251 billion in revenue in 2027, up from just $64 billion in 2022, an annual growth rate of more than by 31%. C3.ai’s results indicate that it is on track to make the most of this impressive opportunity.
The company’s revenue in the second quarter of fiscal 2025, ended October 31, increased 29% year over year to $94.3 million. This is a nice improvement over the 17% growth C3.ai saw during the same period last year, as well as the 21% increase in year-over-year revenue on the other in the first quarter of the financial year. The strong demand for C3.ai’s enterprise AI software is also evident as existing customers have increased adoption of its offerings, while the company is also attracting new customers.
C3.ai closed 58 deals last quarter, including big names like ExxonMobilRolls-Royce, Mars and several government agencies as clients. The fact that C3.ai increased its full-year revenue forecast to $388 million from initial expectations of $382.5 million suggests that new customers and increased spending will lead to a stronger growth for the company.
The updated forecast indicates that C3.ai’s revenue could increase by 25% in the current fiscal year. Better yet, analysts also raised their growth expectations for C3.ai for the next two years following its latest quarterly report.
AI revenue estimates for the current fiscal year data by Y Charts
However, there is a good chance that C3.ai will continue to exceed expectations thanks to the size of the AI software market and its strong customer base. The market could reward C3.ai stock handsomely in such a scenario, which is why investors looking to add a growth stocks to their portfolios that could help them become millionaires in the long run can consider purchasing this AI software specialist.
