The technology sector stands out as a promising industry poised for significant growth in the upcoming years. With the continuous advancement of artificial intelligence (AI), tech stocks have been reaching new heights, indicating a thriving market. According to Goldman Sachs (NYSE: GS), global investments in AI-related ventures are projected to soar to $200 billion by 2025. This surge underscores the vast potential within the industry, with companies expected to deliver impressive results as AI integration expands across various sectors. This presents an opportune moment to consider investing in AI-related stocks.
Businesses that overlook the adoption and investment in AI technology risk losing out on substantial opportunities. The remarkable success of Nvidia (NASDAQ: NVDA) serves as a testament to the profound impact of AI on the current landscape, positioning the company as a frontrunner in the AI race. However, the journey ahead is extensive, prompting numerous enterprises to venture into AI to leverage its benefits. For those who missed the chance to invest in NVDA, here are seven AI companies worth considering:
AI Stocks to Buy: Microsoft (MSFT)
Microsoft (NASDAQ: MSFT) emerges as a primary beneficiary of the AI revolution, leveraging its early investments in OpenAI and the seamless integration of AI across its products and services. By adopting a comprehensive approach to infusing AI into all facets of its operations, Microsoft is poised to drive profitability and expansion in the foreseeable future.
The company has already witnessed success with initiatives like Microsoft Copilot, leading to a surge in user engagement, surpassing 1 million users in October 2023. This uptrend is anticipated to bolster the company’s revenue streams significantly.
With a year-to-date (YTD) increase of 14%, MSFT stock is expected to continue its upward trajectory, propelled by strong financial performance. Moreover, boasting a modest dividend yield and a promising outlook, Microsoft remains a top contender for tech stock investments.
Oracle (ORCL)
Oracle (NYSE: ORCL) has been actively pursuing strategic endeavors, evident in its aggressive expansion efforts such as establishing 100 data centers and launching the Oracle Cloud Infrastructure platform to offer cloud services to enterprises. The recent collaboration with Palantir (NYSE: PLTR) to combine their AI capabilities signifies Oracle’s commitment to innovation.
These collaborations have the potential to redefine the competitive landscape and fuel growth for both companies. Oracle’s robust third-quarter results, showcasing a 7% year-over-year (YOY) revenue growth, underscore its momentum in the AI domain.
Trading at $123 presently, ORCL stock has surged by 18% YTD and 31% over the year, positioning Oracle as a key player in the AI sector with a promising growth trajectory.
Taiwan Semiconductor Manufacturing (TSM)
Taiwan Semiconductor Manufacturing (NYSE: TSM) holds a pivotal role in the expansion of the AI industry by supplying a significant portion of the chips essential for AI technologies, including those utilized by Nvidia. The company recently secured $6.6 billion in federal funding for chip production, signaling its commitment to enhancing its manufacturing capabilities.
With plans to invest \(25 billion in expanding its operations in Arizona and introducing a third plant by 2030, TSMC’s future appears bright. The company has already witnessed a 44% YTD stock surge, accompanied by a notable 34% year-over-year income growth, reaching \)6.1 billion.
Super Micro Computer (SMCI)
Surpassing Nvidia in stock performance, Super Micro Computer (NASDAQ: SMCI) has observed a remarkable 235% YTD surge and an astounding 785% increase over the year. While the current stock price may seem relatively high at $937, the company’s alignment with Nvidia positions it well to capitalize on market trends.
With a strong focus on chipset designs and Nvidia processors, SMCI stands out for its innovative cooling solutions tailored for AI systems. The company’s plans for expanding its production capacity are poised to bolster its financial standing further.
Reporting impressive fourth-quarter profitability, with net sales reaching \(3.66 billion and an EPS increase of 62% to \)5.10 per share, SMCI is well-positioned to meet analysts’ high expectations and sustain its growth trajectory.
AI Stocks to Buy: Alphabet (GOOGL, GOOG)
Although Alphabet (NASDAQ: GOOGL, NASDAQ: GOOG) may not be as vocal in the AI sector as its counterparts, the company continues to make strides in the domain. With a dominant presence in Google Search and Google Cloud, Alphabet remains a formidable force, supported by its ongoing development of cost-effective AI chips.
The company’s robust revenue streams from Google Search and Google Cloud, coupled with its innovative Arm-based AI CPU in the pipeline, underscore its potential for sustained growth. Trading at \(160 with a 15% YTD increase, Alphabet presents an undervalued investment opportunity, with analysts projecting a swift rise to \)185.
Advanced Micro Devices (AMD)
As a key supplier to Nvidia, Advanced Micro Devices (NASDAQ: AMD) is progressively expanding its AI portfolio, positioning itself to compete effectively in the AI market. The recent launch of the MI300X chip tailored for AI applications signifies AMD’s commitment to innovation.
With notable clients like Microsoft opting for AMD’s products, the company’s stock has surged by 18% YTD, currently priced at \(170. AMD’s positive market outlook, coupled with its projected revenue growth of \)5.4 billion in the first quarter, underscores its potential for substantial gains in the near future.
Palantir Technologies (PLTR)
Palantir Technologies has been making significant strides in the AI landscape, leveraging its AI capabilities to drive growth. With a 35% YTD stock increase and a current price of $22, Palantir is on an upward trajectory, bolstered by its strong performance in the AI domain.
The integration of AI into its offerings, coupled with the rising demand for cloud services, positions Palantir for sustained growth. The company’s strategic partnerships and impressive commercial revenue growth underscore its potential for further expansion in 2024.
In conclusion, the AI sector presents a wealth of opportunities for investors looking to capitalize on the technological advancements shaping the future. Each of the mentioned AI companies offers unique value propositions and growth potential within the evolving AI landscape. As always, investors are encouraged to conduct thorough research and consider their investment objectives before making any financial decisions.
