Best AI Stocks to Invest in 2024
Artificial intelligence is talked about more than ever before, and 2023 has been a particularly transformative year for this technology. There are plenty of companies that use AI technologies in their products, so choosing the best AI stocks and investing in them sounds quite reasonable.
AI slowly but surely changes different industries and how we approach numerous processes. For example, in the finance industry, AI is used to help with risk management, fraud detection, and automation of trading. In the educational sphere, AI also offers opportunities for effective language processing, personalized learning, and adaptive assessment of students’ work. In retail, sellers can benefit from AI-powered customer support, tools for inventory management, and more.
Apparently, AI technologies will only continue to become more widely used, and consequently, investors are looking for the most reliable options. If you want to know more about the most promising companies investment-wise in 2024, you can find them in this article.
What Are The Best AI Stocks to Buy?
While investing in AI stocks is an exciting opportunity, making an informed decision is easier said than done. To avoid guesswork and trial-and-error, several factors must be considered to pinpoint the most promising AI stocks.
- Competitiveness and Growth Potential: Check the company’s current position in the market and assess its growth prospects, as well as the growth potential of the industry it belongs to. In some niches, AI makes better strides than in others.
- Financial Performance: Analyze the company’s revenue growth, profitability, and cash flow to check its financial health. Companies with strong financials are better positioned to withstand market volatility and capitalize on growth opportunities.
- Technology and Innovation: Companies with high technology behind AI solutions, cutting-edge AI capabilities, and a track record of innovation may have a competitive advantage in the market.
- Strategic Partnerships: Organizations that have established relationships with major corporations, government agencies, or other technology firms and research institutions have better access to innovation and larger markets.
- Regulatory Environment: Understand the regulations that may impact the company's operations. Stay informed about any regulatory changes or developments that could influence the AI industry as a whole.
- Valuation: Consider the worth of AI-powered stocks relative to their growth prospects and industry peers. The price-to-earnings, price-to-sales, and enterprise value-to-EBITDA ratios are indicative aspects to estimate.
To select the best AI stocks to buy in 2024, we focused on leading AI companies that have already shown revenue growth in 2023 while their stock prices went up. Another decisive factor was their determination to continue developing AI technologies in the next year, and some of them even announced new product releases.
NVIDIA #1 (NASDAQ: NVDA)
Nvidia opens the list of the top AI companies to invest in, and for a good reason. The company is known for producing high-quality chips used in everything from computers to cars. Currently, NVIDIA has seen an outstanding demand for H100 chips designed for AI. In the third quarter of 2023, NVIDIA managed to sell over half a million chips. What is more, the shares of NVIDIA increased by 235% by the end of the previous year.
It is predicted that NVIDIA will show particularly strong performance in 2024, so it’s undoubtedly one of the best-performing AI stocks to consider for investing. The company has recently announced its new H200 chip, which is supposed to provide even more value than its predecessor.
As demand for AI chips is extremely high, NVIDIA is an excellent choice to consider for investing, with its long-standing history and focus on innovative technologies.
Palantir #2 (NYSE: PLTR)
Another one of the best AI companies to invest in is Palantir. It is a well-known software company that uses AI technologies to its advantage and has expanded into different spheres, including healthcare, manufacturing, and finance. The year 2023 has been quite lucrative for the company shareholders, and there are already signs of potential growth for 2024.
As a company, Palantir offers AI-based analytics systems for a variety of uses. Its technologies are currently implemented both by commercial organizations and the government. By the end of 2023, the stocks of Palantir rose by up to 178%. What is more, by the end of the third quarter of 2023, Palantir experienced revenue growth of 17%.
The company continues to invest significantly in artificial intelligence and also extends its prolonged partnership with UniCredit Bank, which only adds points to its reliability and puts its stocks among the best AI software stocks to diversify a tech investment portfolio.
Microsoft #3 (NASDAQ: MSFT)
It wouldn’t be a full list of top AI stocks to invest in without mentioning Microsoft. Being such a huge corporation and one of the leading powers in the computing industry, Microsoft is also heavily focused on AI technologies.
Microsoft is the largest investor in Open AI, a generative AI startup that stands behind the development of the famous ChatGPT. The startup uses Azure cloud services developed by Microsoft, so there is significant collaboration and interlinking between the companies. Besides, artificial intelligence is already integrated into numerous Microsoft services and products, including Xbox, Windows, Defender, and many more.
The company’s stock rose by up to +58% in 2023, which is certainly a significant number. As for the first quarter of the previous year, there was a revenue rise to $56.5 billion.
Final Thought
A lot of investors wonder — is it worth it to invest in AI stocks? The answer is yes, as long as you focus on diversification of your capital and consider how much risk you can handle. It is important to remember that investing in individual stocks is a riskier move compared to broader investments, such as S&P 500 index funds.
All the best AI stocks to invest in that we have on the list have a serious competitive edge. All the companies presented actively use AI in their products and showed significant growth throughout 2023. They are not planning to give up their intentions to expand their services and products this year either.
FAQ
What is AI, and why is it important for the future of technology and society?
AI refers to artificial intelligence, which is designed to imitate human intelligence in various machines and systems. The purpose of AI is to complete tasks typically performed by humans and thus automate processes in different industries. The importance of AI is that it can free people from mundane tasks while allowing them to focus on more creative work.
How do I find and rate the best AI stocks to invest in 2024?
A good way to spot the best AI-powered stock is to look into companies that have been around for a while and show revenue growth with the use of AI. Beginner investors should consider investing in larger companies that don’t rely solely on AI, like smaller startups.
What are the benefits and risks of investing in AI stocks?
There is no denying that even the best artificial intelligence stocks are associated with high market volatility. The reason is that it is an innovative field, so it’s difficult to make accurate predictions. At the same time, the potential for rewards is also very high, so if you have a sufficiently diversified portfolio, investing in AI stocks seems quite reasonable.
Is now a good time to invest in AI stocks?
Estimated by Statista at nearly $242 billion in 2023 and expected to grow by 15.83% annually, the AI market demonstrates exponential growth potential. The use of technology and its permeation across various facets of our lives keeps gaining pace, and so does its application across various industries. With that, AI is a promising field for investments. The leading Wall Street analysts are excited about the most promising AI stocks, so it indeed might be a good time to invest in them.
Do AI stocks pay dividends?
AI is an evolving sector. So, most leading AI companies prioritize using their cash flow to fuel growth and innovation rather than paying dividends. However, there are some AI dividend stocks, too: Intel, Broadcom, Equinix, and Qualcomm are to name a few.
Is the AI industry in a bubble?
Due to rapid growth and significant investment in AI, there is a risk that the industry will go into a bubble state. Whether it’s in a bubble is still a matter of debate among multiple analysts and experts. Most of them tend to think it’s not. For investors, though, it’s essential to conduct thorough research and analysis before making investments in AI to choose the best AI stocks to buy.
