AI stocks could be a great way to boost your portfolio returns in the long run. From tech titans like Google and Amazon to nimble startups like Upstart and Palantir, the AI stock market is a diverse playground.
Get ahead of the curve and capitalize on the explosive growth of the AI market, projected to reach a staggering $5.1 trillion by 2026. We will explore the leading players, uncover promising newcomers, and equip you with the knowledge and insights you need to make informed investment decisions.
What Are AI Stocks?
AI stocks are a category of stocks that focus on companies developing or using artificial intelligence (AI) technology in their products or services. It can include companies from a wide range of industries, such as technology, healthcare, finance, and retail.
AI is a rapidly growing industry with the potential to disrupt many traditional businesses. This makes AI stocks potentially attractive to investors looking for high-growth opportunities. If you are interested in investing in AI stocks, it is important to do your research carefully know the stock market essentials, and consider the risks involved.
Why invest in AI stocks?
There are several reasons why AI stocks could be a good investment:
- High growth potential: AI is a rapidly growing industry with the potential to disrupt many traditional businesses. This makes AI stocks potentially attractive to investors looking for high-growth opportunities.
- Disruptive technology: AI has the potential to revolutionize many industries, from healthcare to finance to transportation. This could lead to significant long-term gains for investors in AI stocks.
- Strong fundamentals: Many AI companies are well-run businesses with strong fundamentals, such as high revenue growth and profitability.
Here are some companies to invest in artificial intelligence:
1. Alphabet (GOOG)
While several promising AI-related stocks exist, Alphabet (GOOG) stands out as a particularly compelling potential investment for its vast team of experts and world-leading AI labs like DeepMind, Google AI, and Google Brain.
Alphabet boasts a solid track record of revenue and earnings growth, demonstrating its ability to monetize its AI investments effectively. Their diverse portfolio of products and services, including Google Search, YouTube, Cloud Platform, and Android, allows them to spread the risks and leverage AI across various revenue streams.
2. Microsoft (MSFT)
Microsoft has a consistent track record of profitable growth, even during market downturns. This stability inspires confidence in their ability to capitalize on the potential of AI. The company's stock has experienced significant growth over the years, driven by its diverse product and service offerings, including software, cloud computing, and AI-related technologies.
Its cognitive services provide pre-built AI models that developers can easily integrate into their applications. These services cover areas such as vision, speech, language, and decision-making, making it easier for developers to incorporate AI features without extensive expertise.
3. Nvidia (NVDA)
Are you searching for the best stock in artificial intelligence? NVDA could be the one for you. Nvidia's Q3 2023 earnings soared, with revenue surging 206% year-over-year, driven by strong demand for AI and gaming GPUs.
Nvidia controls roughly 80% of the discrete GPU market, making it the go-to hardware for AI workloads in data centers and cloud platforms. This metaverse-focused platform leverages AI for real-time rendering, simulation, and collaboration, opening doors for exciting new applications.
4. Intel Corporation (INTC)
One of the top companies for AI is INTC. The artificial intel stocks remain a key player in chip manufacturing, including processors specifically designed for AI workloads. Analyst predictions for INTC vary, but some forecast a possible doubling of the stock price in 2024 if execution meets expectations.
Intel's commitment to AI is evident in its recent launches like Emerald Rapids Xeon CPUs and Core Ultra CPUs with integrated GPUs and NPUs. As demand for data processing and AI-related tasks increases, Intel's position in the data center market can contribute to its overall growth.
5. CrowdStrike (CRWD)
The cybersecurity market is expected to reach $375 billion by 2025, fueled by increasing cyber threats and regulations. CrowdStrike's AI-powered solutions position them well to capitalize on this growth. Analysts predict 84% earnings growth for 2024, indicating a continued profitability trajectory.
CrowdStrike follows a subscription-based business model, generating revenue through ongoing subscriptions to its cybersecurity services. It is essential to review the latest financial reports and performance metrics of CrowdStrike to make informed investment decisions. Look at factors such as revenue growth, profitability, and customer retention.
6. Amazon (AMZN)
Amazon has shown significant growth over the years, with its stock price experiencing substantial increases. AMZN soared over 83% in 2023, outperforming the market thanks to improved profitability and its AI focus.
Amazon leverages AI for product recommendations, search optimization, fraud detection, and dynamic pricing, driving customer engagement and sales. Amazon Web Services (AWS) offers numerous AI tools and services like Amazon SageMaker for machine learning, Rekognition for image recognition, and Lex for chatbot development.
7. Datadog (DDOG)
DDOG boasts a high gross margin (79.95%) and consistently delivers positive free cash flow. They reported a 70% revenue increase in 2021 and 63% in 2022, demonstrating impressive growth momentum. Many analysts are bullish on DDOG, citing its robust financials, strong market position, and future growth potential.
The company invests heavily in R&D, constantly experimenting with and incorporating cutting-edge AI technologies. This commitment to innovation positions them well for future market trends.
8. Adobe (ADBE)
At the heart of Adobe's AI strategy lies Sensei, a powerful platform embedded across its flagship creative software like Photoshop, Premiere Pro, and InDesign. Sensei uses machine learning to automate tedious tasks and suggest design elements.
In fiscal Q2 2023, Adobe's EPS grew 17% year-over-year, driven by strong demand for its Creative Cloud subscription service. Analysts expect this momentum to continue, with projected earnings growth of 16% for fiscal 2023 and 11% for fiscal 2024.
9. Salesforce.com, Inc. (CRM)
Salesforce's Einstein platform integrates AI across its entire CRM suite, offering functionalities like predictive lead scoring, automated customer segmentation, and sentiment analysis. This enhances customer engagement and sales efficiency, driving value for clients.
After years of prioritizing growth over profitability, Salesforce has shifted focus towards increasing margins. This strategy aligns with investor demands and bodes well for future shareholder returns.
10. C3.ai Inc (AI)
C3.ai Inc (AI) is among the best AI intelligence stocks for profits in 2024. C3.ai is actively investing in and developing Generative AI, a cutting-edge technology with immense potential across various applications. This positions them at the forefront of innovation in the AI space.
The stock presents a compelling risk-and-reward proposition. While not a guaranteed profit machine, its strong market position, innovative focus, and impressive customer base offer significant potential for future growth.
11. UiPath Inc (PATH)
UiPath is indeed a strong contender as one of the artificial intelligence stocks and deserves a closer look at its potential profitability in 2024. UiPath is a leading provider of Robotic Process Automation (RPA) software, which allows businesses to automate repetitive tasks traditionally performed by humans.
In its fiscal year 2023, the company delivered $0.15 earnings per share and Revenue growth of 6.5% year-over-year to $308.5 million, surpassing analyst expectations. Its non-GAAP operating income is around $120 million.
12. Baidu (BIDU)
If you are looking for top companies for AI to invest then consider investing in Baidu (BIDU). Often referred to as Google of China, it is AI Powerhouse in China. They have been heavily invested in AI research and development for over a decade, amassing a vast portfolio of technologies like Baidu Brain, DuerOS, and Apollo.
Baidu has ventured into financial services through its subsidiary Baidu Financial Services Group. This includes offerings such as payment services and financial technology solutions. Their Q2 2023 profits jumped 43% year-over-year, reaching $3.11 per share.
13. Upstart Holdings Inc (UPST)
Another best stock in AI is Upstart Holdings Inc (UPST). UPST's stock price has seen a significant climb in 2023, rising over 228% year-to-date as of December 20, 2023. This impressive growth has outpaced the broader market, making it a standout performer in the AI sector.
Upstart utilizes AI models to assess creditworthiness beyond traditional FICO scores, enabling them to approve more loans at lower rates for traditionally underserved borrowers. AI-driven credit assessment helps reduce loan defaults, benefiting both lenders and borrowers.