We may witness the next phase of the so-called artificial intelligence (or AI) boom as edge computing plays a bigger role in processing. Undoubtedly, AI accelerators in the cloud have been and will probably continue to be the way to run today’s most powerful AI models.
However, running models on devices could be the new “first step” for simpler requests, especially once Apple (NASDAQ:AAPL) launches AI-capable operating systems (iOS and macOS) and its latest slate of iPhones later this year. The data centers can always be connected for the complex prompts that “AI on the edge” can’t handle.
Apple had it right with its hybrid approach, betting on both the edge and the cloud. Also, the recently unveiled Apple Intelligence could kick off a boom in iPhone sales and a return of the Mac. As AI software advances rapidly, so too could the AI-powered PC craze later this year and into 2025. These are the stocks to buy for AI-powered PCs.
Apple (AAPL)
Apple received an incredible round of applause from investors on day two of its Worldwide Developer’s Conference (WWDC), with shares soaring more than 7%. Indeed, many analysts were big fans of what they saw during the event. I have a feeling the upgrades will keep flowing in as WWDC progresses and we learn even more about Apple’s longer-term AI plans.
After a solid showing that catapulted AAPL stock to new all-time highs of over $207 per share, the big question is whether the firm has “caught up” in the AI race. The confidence of post-WWDC buyers certainly seems to suggest such. Further, I think the tailwind of Apple Intelligence could come into effect well before the slate of AI-ready operating systems launch.
The software may not have arrived quite yet, but the hardware has. The Macbook Air has the all-new M4 chip, which will likely be able to tackle coming AI features with ease. In my opinion, Mac is Apple’s horse in the AI PC race, and it’s one with great odds of winning.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) launches a fresh slate of AI-powered PCs called Copilot+ PCs. With such AI-savvy hardware and software, the enterprise cloud giant has a huge opportunity to bolster its standing with consumers. Indeed, we always hear about the benefits of AI for enterprise cloud customers, but what about everyday consumers like me and you?
Though Copilot+ PCs weren’t given the same reception as Apple following its latest WWDC 2024 presentation, I think Microsoft has more than just a puncher’s chance to capture a bigger slice of the PC market with its offering. After all, Microsoft is an AI pioneer and owns the operating system (OS) that runs on most PCs.
As Microsoft announces more native first-party AI features (think Recall, which, thanks to AI, allows users to dig into past usage more easily), it will become that much more tempting to buy a Copilot+ PC. How Microsoft’s AI PC stacks up against the new Macbook Air with the new AI-capable M4 chip and macOS Sequoia (the coming AI-packed OS update) remains to be seen.
BestBuy (BBY)
If AI PCs start selling over the next year, the high-tech retailers also stand to be a great bet. Best Buy (NYSE:BBY) comes to mind as a way to play not just a surge in AI PC sales but a rise in demand for AI smartphones or “IntelliPhones” and a slew of other artificial intelligence devices that aren’t on our radars. Along with all those AI-fuelled sales, extended warranties and other bells and whistles will be needed.
Though BBY stock stands out as a great AI winner in this “second phase” of the boom, the stock’s latest post-earnings surge may limit the upside over the near term. Still, there’s value to be had for longer-term thinkers while shares are going for a modest 15.2 times trailing price-to-earnings (P/E).
Citigroup (NYSE:C) analyst Steven Zaccone recently upgraded BBY stock to Buy from Sell, citing “tech-replacement cycles underway” led by “new AI innovation.”
Indeed, Zaccone is right to give Best Buy stock a double upgrade. Moreover, many people will want to try new AI features before they buy. At the local Best Buy, they can do just that before swiping their credit cards.
On the date of publication, Joey Frenette held shares of Apple and Microsoft. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.