During a CNBC interview, Wedbush Securities analyst Dan Ives called artificial intelligence (AI) the fourth industrial revolution. He drew parallels between the burgeoning AI market, the creation of the internet in 1995, and the launch of the iPhone in 2007. Ives expects an "AI spending tidal wave" to supercharge the technology sector in the coming years.
Similarly, billionaire fund manager Dan Loeb told clients that AI "has matured to the point that it is driving a transformational technology platform shift similar to those seen roughly once per decade: the personal computer in the 1980s, the internet in 1990s, mobile in the 2000s, and cloud in the 2010s."
In short, AI is a once-in-a-decade investment opportunity. That doesn't mean the so-called AI bubble -- a phenomenon whereby numerous AI stocks have gained substantial value over a short period -- will never burst. There will undoubtedly be setbacks and drawdowns along the way. But smart investors will ignore temporary hurdles because they know interest in AI is here to stay.
Here's why Amazon(NASDAQ: AMZN) and Docebo(NASDAQ: DCBO) could help investors capitalize on this once-in-a-decade opportunity.
1. Amazon
Amazon reported mixed financial results in the second quarter, with its top line growing a little more slowly than analysts anticipated. Specifically, revenue increased 10% to $148 billion, but Wall Street expected $148.6 billion. However, generally accepted accounting principles (GAAP) net income surged 94% to $1.26 per diluted share, easily exceeding the consensus estimate of $1.03 per diluted share.
Unfortunately, Wall Street was also disappointed with the guidance. Management said operating income would increase between 3% and 34% in the third quarter, but analysts anticipated 37% growth. However, the shortfall is due to investments in AI infrastructure and fulfillment capacity for the holidays, as well as digital content costs associated with NFL Thursday Night Football, all of which are worthwhile expenses.
Looking ahead, Amazon should continue to benefit as e-commerce spending increases, but its largest opportunities lie in digital advertising and cloud computing. Amazon is the third-largest digital advertiser worldwide, and the company is gaining share so quickly that it could overtake second-place Meta Platforms by the end of the decade, according to eMarketer.
Amazon Web Services (AWS) runs the largest public cloud in the world, and it widened its lead by a percentage point over Microsoft Azure and Alphabet's Google Cloud Platform in the second quarter. AI is one reason AWS is gaining market share. New products like generative AI development platform Amazon Bedrock and coding assistant Amazon Q are gaining customer traction.
CEO Andy Jassy recently told analysts, "Our AI business continues to grow dramatically with a multibillion-dollar revenue run rate despite it being such early days." AWS is perfectly positioned to meet the demand for AI cloud services because it operates the largest public cloud and spends heavily on product development, from custom AI chips to software.
Looking ahead, Wall Street expects Amazon to grow earnings per share at 25% annually through 2025. That consensus estimate makes the current valuation of 42 times earnings look reasonable. Those figures give a price/earnings-to-growth (PEG) ratio of 1.7, a material discount to the three-year average of 2.9. Investors should feel comfortable buying a small position in this stock today.
2. Docebo
Docebo specializes in corporate learning software. Its learning management system lets businesses create, curate, deliver, and measure the impact of training across internal and external use cases. To elaborate, businesses can use the platform to train employees and partners and to embed customer-facing education into their products.
Docebo has differentiated itself with two innovative applications. Docebo Flow lets users integrate learning content into other applications, enabling employees to learn during the normal flow of work. Docebo Shape uses generative AI to turn source materials, like online articles, corporate documents, and case studies, into learning content.
In a note to clients, Morgan Stanley analysts Josh Baer and Keith Weiss wrote, "Docebo is not only disrupting the internal learning management system (LMS) market, taking share from legacy vendors, but it is also leading the market in a greenfield external learning opportunity."
Docebo reported solid financial results in the second quarter that beat expectations on the top and bottom lines. Its customer count climbed 9%, and the average contract value rose 10%. In turn, revenue increased 22% to $53 million, and adjusted net income surged 86% to $0.26 per diluted share. Interim CEO Alessio Artuffo told analysts, "Our leadership in the learning industry, along with the effective use of AI, continue to set us apart from legacy competitors."
Looking ahead, Grand View Research estimates that LMS spending will compound at 19% annually through 2030. Docebo should match that pace, with potential upside arising from its generative AI application. Wall Street expects Docebo's adjusted earnings to increase by 58% annually through 2025. That makes its current valuation of 83 times adjusted earnings look reasonable. Patient investors should feel comfortable buying a small position today.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Trevor Jennewine has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Docebo, Meta Platforms, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
