In the fast-evolving world of technology, the potential of artificial intelligence (AI) has captivated many companies, leading them to shift their focus towards this burgeoning sector. According to Grand View Research, the AI market is predicted to grow at a CAGR of 37% until 2030, reaching an estimated valuation of nearly $2 trillion. With its applications spanning across various industries like cloud computing, autonomous vehicles, e-commerce, and productivity software, AI's growth potential indicates promising long-term investment opportunities.

Two prominent players in the tech industry that appear poised to benefit from the AI market growth are Amazon and Alphabet. Both companies, known for their strong positions in the cloud computing sector, have been heavily investing in AI, making them attractive options for investors in the coming years.

Amazon, despite experiencing significant setbacks during the economic downturn of 2022, has demonstrated its resilience and reliability over the long term. The e-commerce giant has experienced a remarkable turnaround, with its stock climbing by 46% in the last 12 months. Amazon's robust growth in its e-commerce segments, coupled with its expanding role in AI, has earned the confidence of investors. In the first quarter of 2024, Amazon reported a 13% increase in revenue compared to the previous year. Its cloud platform, Amazon Web Services (AWS), has been a major growth driver, recording a revenue gain of 17% and an impressive 84% surge in operating income. AWS's expansion of AI cloud services and foray into chip design further solidify Amazon's position in the AI market.

Not to be outdone, Alphabet, the parent company of Google, also presents compelling investment prospects in AI. Although it may have lagged behind competitors like Amazon and Microsoft in terms of market share, Alphabet's diverse product range and massive user base make it an intriguing choice. The digital advertising giant has been investing billions into AI, launching its most advanced AI model, Gemini, earlier this year. In addition, Alphabet recently announced a $2 billion plan to construct a new data center in Malaysia, equipped with a Google Cloud hub. While it may take time for Alphabet to fully realize its AI potential, its extensive portfolio of powerful brands, such as Android, YouTube, and Chrome, positions the company well to capitalize on AI's growth. Enhanced technology could pave the way for monetizing AI efforts through improvements in Google's user experience, expanding AI tools in Google Cloud, enhancing video recommendations on YouTube, and more efficient advertising.

Considering the market capitalization and global reach of both Alphabet and Amazon, it is evident that they are behemoths in the tech industry. Their respective products and services are utilized by millions of individuals and businesses worldwide, providing ample opportunities for AI integration. Over the past few years, both companies have shown remarkable reliability, with Alphabet experiencing a stock growth of 176% and Amazon boasting a growth of 184% since 2019. Comparing the valuations of the two, Alphabet stands out as a better value proposition, as indicated by its significantly lower forward price-to-earnings ratio and price-to-free cash flow.

While Alphabet emerges as the more attractive investment option in the AI space, it is still advisable to keep Amazon on the radar, especially when its shares are trading at more favorable price points. The growth potential and promising outlook in the AI market for both companies make them compelling choices for investors seeking long-term gains.

Disclaimer: Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market (an Amazon subsidiary), is also a member of The Motley Fool's board of directors.