10 AI Stocks to Buy Now
Since its launch in November 2022, ChatGPT has unleashed a massive
investor interest in artificial intelligence (AI).
That’s because generative AI like the kind developed by ChatGPT shows
how powerful this trend has become. And it’s kicked off a race by
companies to develop AI programs and systems of their own.
With AI tools, companies can create more efficient manufacturing
processes. Reduce waste. Better utilize their workforce.
Even if there are only small gains in those areas, that can add up to billions
of dollars in added value for a large company – and trillions across the
entire economy.
Already, the market has been looking for the top AI winners. While they’ve
already had a run up, AI is so early in its development stages that these
stocks have years of big gains ahead of them.
Here are the top 10 AI stocks to buy now:
Top AI Stock #1: Microsoft (MSFT)
For years, tech giant Microsoft has been an investor in OpenAI. They
invested $1 billion in the company back in 2019, well before the launch of
OpenAI’s flagship product, ChatGPT.
In 2023, they confirmed a multi-billion-dollar investment that makes them a
minority partner of the company.
That puts them at the forefront of AI technologies.
Given Microsoft’s existing products, AI integration is a no-brainer. Adding
AI to Microsoft’s Office suite, or in its gaming division, could create better
products and improved revenue opportunities.
Microsoft sees itself as being the company to bring the top AI tools,
infrastructure, and models to the world, akin to its dominance in operating
systems with Windows back in the 1990s.
Currently, Microsoft has a series of AI programs, such as its AI Skills
Initiative. This offers free online courses and grants for generating AI and
data science.
There’s also a Professional Program, providing hands-on experience in AI
systems.
Microsoft is also one of several tech giants working on an AI committee to
shape AI policy in in the United States government.
Even though it’s one of the largest companies on earth, Microsoft’s
investment in OpenAI pays off, the company could continue to see the
massive growth continue.
Top AI Stock #2: Dell Technologies (DELL)
Dell Technologies may be best known as a manufacturer of personal
computers. However, they’ve built out a strong suite of hardware and
software technologies designed to integrate with today’s AI trends.
That’s because Dell has become a leader in the server space. And software
integration on those servers allow Dell to provide AI solutions at the cloud,
datacenter, and PC levels.
Dell’s tools include content and code creation from AI services as well as
digital assistants. Dell is even leading in “Digital Twins,” which is a digital
replica of a product or service that can be tested out in real-time and on a
predictive level before a physical model is created.
That puts Dell at a strong advantage for building out better AI
infrastructure in the years ahead, and why the company is a strong AI
player today, if an off-the-radar one.
While generative AI is all the rage right now, different AI programs over the
next few years will find a home on Dell’s purpose-built servers dedicated to
handing AI. Next-gen PCs, also powered by AI tools, will be part of Dell’s
future product lines.
With most investor interest in the AI space still focused on software, Dell’s
integration of hardware and software puts it at a strong advantage for big
returns over the next few years.
Top AI Stock #3: Nvidia (NVDA)
Graphics processing units (GPUs) are the key technology for processing
data quickly. They’re a key component for AI technologies.
And in the GPU manufacturing game, there’s one runaway winner, Nvidia.
Starting as a GPU provider for the gaming and computer space, AI demand
is driving higher-level uses. They’re expanding into data center markets, the
automotive space for self-driving cars, and GPUs are critical for successful
cryptocurrency mining.
For AI, Nvidia has created the H-100 cloud server GPU. It’s become the
industry standard for companies employing AI technology, given its rapid
processing speed.
Nvidia is now even using AI tools to better design chips, which could help
them expand their lead over competitors in the years ahead.
In short, Nvidia isn’t just the top AI stock … it’s likely going to be the top
overall tech stock of the 2020s.
Even though Nvidia’s share price has surged by over 500% in the past few
years, its earnings and revenues have grown just as fast.
In other words, even with a big price rally, shares aren’t overvalued.
Especially when looking out at their growth potential in the years ahead.
One sign of Nvidia’s continued success? A hefty 55% profit margin, which
has even increased over the past year. That’s a great level for a software
company. For a company in the manufacturing space? It’s incredible.
Nvidia is a must-own stock for the AI trend … and for most of the other tech
trends underway today.
Top AI Stock #4: Advanced Micro Devices (AMD)
While Nvidia has a big lead in the GPU space, nearly all chipmakers are
benefiting from the booming demand for chips to meet the AI boom.
Among them, the leader for AI chips is Advanced Micro Devices.
They’re transitioning their business to increase exposure to AI, but they’re
still the big chip leader in the PC market.
To that end, they’ve partnered with companies like Microsoft (MSFT) to
supply chips to power their Azure platform.
Given Microsoft’s relationship with ChatGPT, that means AMD could be at
the forefront of new developments in the AI space. That makes them the
chipmaker best poised to grab market share. In time, they could eventually
run neck-and-neck with Nvidia.
AMD is also working on AI-powered PCs. Rather than using a central server
and requiring an internet connection, an AI-powered PC could make it
easier for everyday users to employ AI in their work and play.
Given its expanding position in AI, the years ahead may be better for AMD
than for Nvidia. That makes it a company worth owning as the AI trend
takes off.
Top AI Stock #5: Alphabet (GOOG)
Among the top tech players, Google has been slower in developing AI
technologies, but has launched its own AI chatbot, Gemini.
The company, which still has nearly 90% of the global search engine
market, can use AI tools such as voice prompts, to allow users to search the
web without having to type in text on a screen.
Google is developing Project Astra, a digital assistant, powered by AI. One
of the early tools is the ability to use a smartphone’s camera to identify the
source of noises, and the ability to help users find misplaced items.
Google is also working on new technologies that can employ AI. While
smartphones are still the standard handheld tool, Google Glass and other
technologies could become leaders in the “wearables” part of the AI market.
While Google is developing AI tools focused on maintaining its market
share, there could be some further gains ahead for Google.
That’s because Google has a history of innovation on other projects. That
includes the user-friendly Gmail platform, or the Android operating system,
which has become the dominant operating system for non-Apple
smartphones.
In short, while Google has been a late bloomer in the AI race among the big
tech players, it may come up with some surprising applications that become
an industry standard. And that could do much to lift shares.
Top AI Stock #6: Oracle (ORCL)
Database giant Oracle is rapidly shifting to providing key services in the AI
space. The company has spent the past few years shifting from physical
database solutions to cloud infrastructure, and AI is the next step.
The company’s AI services allow developers to apply AI applications to their
business operations, and Oracle’s cloud database servers are already
running with Nvidia H100 GPUs, putting them as the industry leader.
Oracle’s AI services include the use of large language models and machine
learning to best customize a user’s experience. That also allows for
improved forecasting and labelling on datasets for further training AI
models.
To grow this business, Oracle has invested over $2 billion in contracts with
AI startups, which could lead to further breakthroughs.
That includes Cohere, which can provide private and secure generative AI
services. While systems like ChatGPT are available for anyone to use,
Oracle could carve out a strong niche in privacy-centered AI services.
Analysts have a moderate buy rating on the stock. While not expected to be
the hypergrowth AI play as the semiconductor space, Oracle has posted
strong revenue growth in the past few years as it’s shifted from physical
databases to cloud services. AI stands to accelerate that trend.
Top AI Stock #7: Palantir Technologies (PLTR)
Originally created to sift through the world’s surging amount of data,
Palantir Technologies (PLTR) is at the forefront of the AI trend.
Palantir deploys software programs, largely for the intelligence community,
to provide signals intelligence from large data sets. AI and machine learning
tools are utilized to speed up the process and create a more efficient
business over time.
The company was founded on the idea of identifying the next terrorist
target after noting how airline stocks were heavily shorted before the 9/11
attacks.
The company’s use of AI systems to sift through this data has made it an
early leader in AI, and its tools could expand beyond government customers
to corporate ones as well.
The company’s Artificial Intelligence Platform (AIP) is powered by GPD-4
and is used for defense and war planning strategies.
The platform uses data from a number of sectors, including government,
healthcare, and financial markets to predict potential attacks and defenses
to those attacks.
Palantir has been publicly traded for a few years now, and the company is
finally starting to turn a profit. Revenues are growing at a double-digit rate,
and an increased go-to-market strategy is leading to an increased number of
long-term government contracts.
Palantir has a long growth trajectory ahead that should allow it to continue
outperforming the stock market.
Top AI Stock #8: Taiwan Semiconductor (TSM)
While companies like Nvidia get all the attention in the chipmaker space,
they’re really only a designer of chips. Manufacturing for chips is
outsourced.
That means that the manufacturers are in a sweet spot. They can profit no
matter which chip designer has the best design for the market right now.
That’s a good reason to buy shares of these manufacturers as a way to play
on the overall trend of AI growth.
And in the manufacturing space, no company leads like Taiwan
Semiconductor.
They make the smallest and most power-efficient chips, both of which are
critical for the growth of AI demand.
Unsurprisingly, TSM has been on a tear, thanks to their 3 nanometer (3nm)
size chips, the smallest viable chips on the market today. As the most
advanced chips on the market today, TSM has a substantial edge, which it is
on track to keep for the foreseeable future.
Currently, TSM has over 50% of the market share of contract chip
manufacturers, and its current competitors are struggling to restructure
and retool. That’s keeping profit margins high.
With TSM expanding its manufacturing operations outside of Phoenix,
Arizona, the company now has geographical diversification and can expand
its lead over competitors even further.
Top AI Stock #9: Apple (AAPL)
Consumer tech giant Apple has been late to the AI game. But they’ve gotten
into the AI race swinging, providing an AI feature available on the Apple
ecosystem, particularly the iPhone.
Apple Intelligence is the company’s latest service. It’s a feature available in
devices running iOS 18.1. Apple promises that Apple Intelligence can help
customers communicate and work more efficiently while on the go.
The technology is a hybrid of on-device AI and server processing. This
avoids having to use AI on a full computer or being hooked up directly to a
server running an AI program. While not as fast or robust as other AI
models today, the ability to use an AI tool on a mobile device and with
limited connectivity is something that no other company currently offers.
Apple Intelligence is based around the idea of making it easier to write,
create images and movies, and enhance the power of Apple’s virtual
assistant, Siri.
Plus, at a time when concern over AI tools is brining up fears about privacy,
Apple has created what it calls a “private cloud” feature that doesn’t store
personal data and only uses AI tools for requests.
Apple may be known for its easy-to-use gadgets, but the software and
services are high-margin items. Apple Intelligence offers a new source of
high-margin revenue for an already massive market leader.
Top AI Stock #10: Emerson Electric (EMR)
Part of the AI story is the insatiable demand for electricity that AI programs
need to operate. Companies have been rethinking their data center needs
and even their power needs, embracing technologies like nuclear energy.
Emerson Electric is a key player in part of that trend. They’ve developed a
cloud-based automation platform to help integrate AI deployment. That
includes tools to recognize when power requirements aren’t being met, and
how to optimize workflows to reduce disruptions.
That specifically allows power and even water companies to employ AI and
sort through all the data that they collect. Emerson estimates that they can
automate up to 70% of system configuration.
Emerson’s AI tools can help reduce transmission losses, reduce overall
consumption, and help better integrate clean energy sources into existing
power grids. And Emerson’s tools for the HVAC and refrigeration
technologies can create truly smart homes.
That’s on top of the company’s physical hardware that it manufactures,
including switches and sensors to help regulate power and computer
network needs.
Currently, Emerson is much more of a value play relative to other, more
well-known, AI names. And with double-digit earnings growth likely over the
next few years as AI infrastructure builds out, Emerson has a bright future
ahead