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Artificial Intelligence has taken the world by storm. This has resulted in AI technologies being utilized in a variety of domains such as teaching, online shopping, chatbots, voice recognition, and more. The massive popularity of AI has started getting attention from investors. This has led to most investors wonder what are the top AI stocks to buy in 2023.
In this article, we will mention a complete guide describing AI stocks, top AI stocks in 2023, are AI stocks worth it, and more. So, let’s begin.
AI stocks refer to the shares of those companies or businesses that are involved in Artificial Intelligence technologies. This includes AI-related domains such as Deep learning, natural language processing, Artificial neural network, machine learning, robotics, and more. AI stocks usually fall into two major classifications: Companies that are involved in the complete development process of AI technology or those who have invested or partnered with AI developers.
Here are some of the best AI stocks of July 2023 as follows:
Since 2019, Microsoft has invested in OpenAI, the creator of ChatGPT. The partnership began with a $1 billion investment, and in January 2023, it was extended into a “multiyear, multibillion-dollar investment.”
Read this guide If you want to know Can you buy OpenAI stock or not?
Microsoft aims to democratize AI through its Azure cloud computing platform. Like Alphabet, Microsoft introduced an AI chatbot for Bing.
Over the last year, MSFT has witnessed a remarkable 32% surge in its stock price. This substantial growth highlights the company’s strong performance and positive market sentiment toward its future outlook.
For those interested specifically in investing in ChatGPT, the scenario might be a bit different as OpenAI, the organization behind it, is not publicly traded. This means you can’t directly buy shares of OpenAI like you would with Microsoft.
However, there are indirect ways of potentially investing in the success of ChatGPT. For detailed guidance, you can refer to this article on how to buy Chat GPT stock.
Amazon offers AI and ML services and infrastructure through its cloud computing platform, Amazon Web Services (AWS). The renowned e-commerce giant further employs AI within its online store to provide personalized product recommendations. Moreover, Amazon’s virtual assistant, Alexa, which operates on Echo devices, is powered by AI technology. AMZN stock has experienced an annual return of 19%.
Nvidia, renowned for producing high-performance microchips driving AI software and services, recently expanded its long-standing AI collaboration with Oracle.
As part of the agreement, Oracle will leverage Nvidia’s full AI platform, encompassing chips, systems, and software, within its Oracle Cloud Infrastructure, a competitor to Amazon’s AWS. The ultimate goal is to enhance access to AI capabilities for Oracle’s enterprise clients and foster a culture of AI innovation.
Nvidia’s founder emphasized the escalating business demand for AI platforms, citing that accelerated computing and AI play crucial roles in addressing mounting operating costs for businesses. The trend toward cloud-first AI strategies is becoming increasingly prevalent, enabling swift development and scalable deployment.
Over the past year, NVDA stock has experienced a remarkable surge, soaring by an impressive 160.27%.
Through its Watson products, IBM provides AI and ML services to assist customers in making informed decisions and maximizing profits. The Watson AI solutions encompass various applications that optimize customer service, streamline processes, and predict outcomes.
For enterprise clients, IBM offers the flexibility of Watson Studio, allowing them to develop and scale their own proprietary AI applications. Over the years, IBM has also made strategic AI acquisitions, including Turbonomic, Instana, and Databand.ai, bolstering its AI capabilities.
C3 AI offers SaaS applications for building, deploying, and managing large-scale AI solutions. Their software suites cater to supply chain optimization, energy efficiency, and industry-specific needs like financial services and oil and gas.
A significant aspect of C3’s operations is its partnership with Alphabet. Collaborating with Google Cloud infrastructure and resources, they jointly develop innovative AI applications. Additionally, all C3 AI applications are accessible through Google Cloud as well.
Over the past year, C3 (AI) stock has experienced a remarkable surge, soaring by an impressive 105.57%.
Alphabet, the parent company of Google, recently introduced its AI chatbot, Bard, similar to ChatGPT. Bard’s unique function allows users to pose questions, and it quickly retrieves, compiles, and summarizes online information, providing a single, comprehensive answer.
Considered a potential evolution of search, Bard differs from traditional search engines by delivering a simplified and concise response, rather than a list of web pages.
However, Bard faced challenges during its initial test launch, delivering an incorrect answer in a demo video that aimed to showcase its capabilities. Alphabet now faces the task of refining Bard’s technology.
Beyond Bard, Alphabet also offers business AI tools and infrastructure through its Google cloud computing unit. Alphabet (GOOGL) stock has experienced a 30% increase over the past year.
Specializing in high-performance memory and storage hardware, Micron Technology serves as a crucial driving force behind AI solutions. Its innovative products find applications in data centers and self-driving cars, revolutionizing these industries.
In 2019, Micron further strengthened its AI capabilities by acquiring startup FWDNXT. By integrating FWDNXT’s advanced hardware and software solutions, Micron has enhanced its capacity to power deep learning and neural networks, driving AI advancements even further. Micron’s (MU) share price grew by 9.84% over the last year.
According to CEO Elon Musk, Tesla is among the leading companies in the world when it comes to artificial intelligence. Industry experts believe that AI-based technologies offer a significant multi-trillion-dollar opportunity for Tesla and its shareholders.
Tesla’s full self-driving (FSD) platform uses special AI software and hardware to enable its vehicles to drive autonomously. Last year, they introduced FSD Beta to Tesla owners in North America, and this year, it became available in Australia and Europe.
The company hasn’t given a specific date for the final version’s release, but Elon Musk mentioned they might achieve full autonomy this year.
FSD software focuses on two big opportunities: self-driving cars and robotaxi services. The global autonomous vehicle market is predicted to grow at 40% per year, reaching $1.8 trillion by 2030, as stated by Precedence Research.
Tesla can make money from this by selling its FSD software to customers or by licensing it to other car manufacturers.
Tesla aims to monetize FSD software with commercial robotaxi services. Estimates suggest robotaxis could generate $9 trillion in yearly revenue by 2030, accounting for 8% of global transportation by 2035.
Tesla plans to mass produce a robotaxi in 2024 and launch an autonomous ride-hailing network, possibly utilizing customers’ parked vehicles. Full autonomy this year could lead to a swift service launch.
Tesla has a favorable position in the autonomous vehicles and robotaxi markets, which could be valued at $10 trillion by the end of the decade. Their extensive autonomous driving data and advanced “efficient inference computer” in their cars give them a competitive advantage in developing superior FSD software, as data is crucial for training AI models.
Meta Platforms is an attractive long-term investment with its soaring 135% year-to-date growth in 2023. Its vast user base of over 3 billion daily active users on social media apps offers untapped potential for AI integration and further enhancements.
With the aid of AI, Meta can enhance app engagement, appealing to advertisers who rely on ad views from platform users. By increasing user interaction by just 10 minutes, Meta can significantly boost ad sales.
Meta has already demonstrated its ability to run a highly profitable business, with operating income surging from $2.8 billion in 2013 to $28.9 billion in 2022. Leveraging AI to further extend user engagement over time is expected to maintain the company’s elevated profits.
In the last year, the share price of META has experienced a substantial surge of 76.57%.
Amid the hype surrounding Nvidia’s share price surge in 2023, it’s essential to recognize that Taiwan Semiconductor remains the world’s largest semiconductor manufacturer, producing approximately 60% of the global chip supply.
According to Richard Clode, a fund manager at Janus Henderson Investors, Taiwan Semiconductor Manufacturing Company (TSMC) is poised to reap substantial benefits from the rising AI trend. As AI capabilities become more crucial in various devices such as iPhones, laptops, PCs, and cars, powerful semiconductors, like those manufactured by TSMC, will play a pivotal role in their seamless integration.
TSMC, renowned as the largest chipmaker globally, stands to gain from AI-related stocks, notably Nvidia, which relies on TSMC for manufacturing its graphics processing units. Although TSMC’s second-quarter profits dropped due to sluggish consumer electronics demand, analysts foresee a potential upside of nearly 15%, with 92% of them giving the stock a buy rating.
Amid slow consumer electronic demand, TSMC stock has shown a notable 12% surge over the past year.
ASML Holding stands to benefit from the competition in developing generative AI applications like chatbots.
ASML’s website highlights how AI applications drive the need for chipmaking systems that produce smaller, faster, and more efficient microchips. Specifically, ASML’s extreme ultraviolet (EUV) lithography machines enable chipmakers to create 7-nanometer (nm), 5-nm, and 3-nm chips in significant volumes, leading to a healthy demand for these advanced process nodes.
Due to its monopoly in EUV lithography, ASML’s machines will play a crucial role in meeting the healthy demand for AI applications.
In the past year, ASML stock has surged by more than 18% amid the excitement surrounding AI.
Based in Walldorf, Germany, SAP SE (NYSE: SAP) is an enterprise technology company that empowers its clients to incorporate artificial intelligence into their business platforms and train models using their own datasets.
In the first quarter of 2023, a study of 943 hedge fund portfolios disclosed that 14 of them held stakes in SAP SE (NYSE: SAP). Among these, the largest shareholder is Ken Fisher’s Fisher Asset Management, with 6.2 million shares valued at $792 million.
Over the past year, the stock price of SAP SE has experienced a remarkable surge of 45.72%.
RELX is a global provider of information and analytics for professional and business clients. The company is strategically incorporating AI and machine learning across its legal, risk, and science divisions, including a recent $36 million acquisition of Aistemos, an AI-based patent classification firm.
Analyst David Amira sees Thomson Reuters Corp.’s plan to acquire AI legal services specialist Casetext as a validation of RELX’s bullish prospects for its Lexis+ AI offering. He believes that AI technology will drive RELX’s revenue growth in the coming years. Bank of America rates RELX stock as a “buy” with a price target of $37.80, while the stock closed at $33.48 on July 20.
During the last year, RELX’s stock price has witnessed an 18% growth, despite the general downturn in the market.
Arista is a major global provider of high-speed cloud networking solutions, catering to data centers, cloud providers, enterprises, and campuses. They utilize artificial intelligence to enhance the performance, reliability, and security of their network infrastructure and applications.
For instance, Arista harnesses AI to oversee and analyze network traffic and health on its switches, routers, and software. Employing machine learning and big data analytics, Arista can detect and resolve issues, optimize network setups, and automate network tasks. This approach results in minimized downtime, enhanced efficiency, and reduced costs.
Arista’s innovative cognitive Wi-Fi solution stands as another remarkable example of its technology. This cloud-based platform delivers intelligent Wi-Fi services for enterprises and campuses, powered by AI to automatically adapt to changing environments and user demands. The result is a significant improvement in Wi-Fi coverage, capacity, and overall quality of service.
Moreover, Arista leverages AI to enhance its security solutions, particularly with the CloudVision-as-a-Service platform. This AI-driven security platform provides real-time visibility, threat detection, and response capabilities throughout the network, effectively safeguarding against cyberattacks, managing risks, and ensuring regulatory compliance.
Regarding Arista’s stock, it is considered a pure-play growth stock, meaning it currently does not offer dividends, focusing instead on potential growth opportunities.
Baidu, the leading Chinese internet search provider, has a diverse business portfolio, including AI and cloud ventures, and a majority stake in the streaming video platform iQIYI Inc.
Baidu has shown a strong dedication to AI investments. They have been actively investing in AI since 2010, giving them a competitive advantage, even compared to their American counterparts.
In response to ChatGPT, Baidu introduced its large language model generative AI product, ERNIE Bot. This integration resulted in an impressive 400% year-over-year boost in AI Cloud sales leads for Baidu in March, accompanied by hundreds of thousands of testing requests.
Baidu’s AI strategy extends beyond investing in new products and services. With over four million users, PaddlePaddle, Baidu’s developer community, has become a hub for skilled AI developers researching innovative ideas.
This network’s growth is expected to enhance Baidu’s AI capabilities as it enables close monitoring of real-world applications developed by the community, leading to strategic investment decisions that create long-term value.
When selecting AI stocks to invest in, consider the following factors:
1. Company’s Focus: Look for companies with a significant focus on AI development, research, and innovation. Check if AI is a core part of their business strategy.
2. Financial Health: Assess the company’s financial performance, revenue growth, and profitability. A stable financial foundation is crucial for long-term investment prospects.
3. AI Technology: Analyze the uniqueness and competitiveness of the company’s AI technology. Companies with cutting-edge AI solutions are likely to have a competitive advantage.
4. Industry Presence: Consider companies operating in industries with high AI adoption rates, such as technology, healthcare, finance, and manufacturing.
5. Partnerships and Collaborations: Look for companies that have strong partnerships or collaborations with other AI-focused firms or industry leaders. This can indicate the potential for growth and market influence.
6. Leadership Team: Assess the expertise and experience of the company’s leadership team, particularly in AI-related fields.
7. Customer Base: Evaluate the company’s customer base and the adoption of its AI products or services. Satisfied customers can signify a promising future.
8. Regulatory Environment: Be aware of the regulatory landscape surrounding AI technologies, as favorable regulations can support AI company growth.
9. Research and Development: Investigate the company’s investment in research and development. Consistent efforts to improve AI technology demonstrate commitment to staying at the forefront of the industry.
10. Market Position: Consider the company’s position in the AI market relative to its competitors. Market leaders may have a higher chance of long-term success.
Remember that investing in the stock market carries inherent risks, and past performance does not guarantee future results. It’s essential to conduct thorough research and, if needed, seek advice from a financial advisor before making any investment decisions, especially in the dynamic field of AI stocks.
The AI sector is flourishing, with AI-related ETFs outperforming the S&P 500 year to date. For instance, the SPDR S&P 500 Trust (SPY) saw an 18% increase, while the First Trust Nasdaq Artificial Intelligence and Robotics ETF (RBOT) surged by 24% by mid-year. As a result, many investors are considering increasing their investments in this promising market segment.
Investing in AI stocks has the potential for growth and profitability, given the rapid advancement of AI technology and its increasing applications across various industries. However, it’s important to consider the risks and competition in the AI industry, as well as potential regulatory challenges.
Thorough research, diversification, and seeking professional advice are crucial for successful investing in AI stocks, as with any investment opportunity.
