Is It Worth Buying AI Stock
Top commission-free stock broker - eToro
Top 8 best AI stocks to buy for 2024:
-
Amazon (AMZN) - increasingly using AI in just about every aspect of its operations
-
Nvidia (NVDA) - makes many of the key microchips that power AI software and services
-
C3.ai (AI) - has been in the AI business longer than many other companies in the industry
-
BigBear.ai Holdings (BBAI) - its products provide its customers with sophisticated data analytics
-
IBM (IBM) - helps many business clients to streamline operations, improve customer service, and automate many work processes
-
Microsoft (MSFT) - has been investing in AI for a number of years
-
Baidu (BIDU) - has developed an AI chat program, dubbed (in English) “Ernie”
-
Recursion Pharmaceuticals (RXRX) - is frequently touted as one of the leading contenders among AI drug discovery stocks
A.I. – artificial intelligence – has perhaps been the most talked about and hyped stock market sector throughout 2023. And its popularity with investors is all but assured to continue into 2024. It’s hard to find any stock advisory service or newsletter that hasn’t recommended a number of AI stocks as “the next big thing”. One recent example is Docebo (DCBO) being touted by the Motley Fool as possibly being “the next NVIDIA”, one of the Magnificent Seven tech stocks, currently selling for about 10 times the price of Docebo.
I probably get at least one email advertisement every day, urging me to load up on some dirt cheap AI stock that the ad copy suggests can give me a 10,000% return on my investment within just the next few months. Of course, that’s not very likely. However, it is entirely possible that one or more of the best AI stocks may well eventually become big winners, giving investors exceptionally high returns on investment.
The million dollar question is, “Which AI stock (if any) will be the big breakthrough winner in the race to deliver the best artificial intelligence?” Will it be one of the already large tech stocks, such as Nvidia (NVDA) or Microsoft (MSFT)? Or will one of the current AI penny stocks zoom to the top?
We don’t have a crystal ball that will give us the definitive answer, but the following is our current Top 8 list of the best AI stocks for investors to consider buying for 2024. For each stock on the list, we offer some of the main reasons that various stock analysts give for recommending the stock.
(This list is in no particular order. Number 1 isn’t necessarily the best pick, and number 8 isn’t necessarily the worst.)
The best AI stocks for 2024
-
1
Amazon (AMZN). Amazon isn’t just an AI company, but it is increasingly using AI in just about every aspect of its operations. Amazon uses artificial intelligence to refine its pricing and to help make its advertising as targeted and efficient as possible. It also markets its AI capabilities to companies that use Amazon Web Services (AWS). And, like other big tech stocks, such as Nvidia and Microsoft, it has plenty of cash to bankroll further development of AI.
-
2
Nvidia (NVDA). Nvidia is on pretty much everyone’s list of “best AI stocks”. First of all, it makes many of the key microchips that power AI software and services. Second, Nvidia has a key partner in the development of AI – Oracle (ORCL), whose cloud computing software is a competitor of Amazon Web Services.
-
3
C3.ai (AI). C3.ai has the distinct advantage of having snatched “AI” as its ticker symbol, making it look like the AI company to many investors. Founded in 2009, it has been in the AI business longer than many other companies in the industry. C3 markets several turnkey AI software products that are used for things such as predictive analytics and various “Internet of Things” (IOT) applications. Up until 2023, C3’s stock price did pretty much nothing but steadily fall from its initial offering price of $100, but this year has seen the stock soar from $11 up to as high as $50 per share.
-
4
BigBear.ai Holdings (BBAI). BigBear.ai is one of the newer and smaller companies in the AI sector. Its products primarily provide its customers with sophisticated data analytics. The stock is, at the time of this writing, selling for $1.75 a share, with a 52-week trading range of $0.58 to $6.77. BigBear recently announced that it is acquiring Pangiam, a company that creates facial recognition and biometric software. BigBear touts the acquisition of Pangiam as enabling it to become a leader in visual AI services. It also enjoyed reporting its first quarter of being net profitable and having positive cash flow. The stock has been repeatedly touted by market analysts Nomi Prins and Shah Gilani.
-
5
IBM (IBM). IBM’s Watson AI suite of programs has been getting a lot of industry buzz lately, and its stock price has been rising accordingly. Shares of IBM have risen from a May 2023 low around $120 up to over $150 a share in November. Watson’s services help IBM’s many business clients to, among other things, streamline operations, improve customer service, and automate many work processes. IBM has made a point of pursuing several strategic AI-related acquisitions, including Turbonomic and Instana.
-
6
Microsoft (MSFT). Microsoft stock recently scored new all-time highs, rising above $350 a share. The enthusiasm of buyers for the stock has been at least partly fueled by Microsoft’s business prospects related to AI. Especially notable is Microsoft’s partnership with OpenAI, the creator of ChatGPT. The collaboration between the two companies extends back to an initial $1 billion investment made by Microsoft in 2019. Microsoft recently announced that it will be extending the partnership with OpenAI on a “multi-year, multi-billion dollar” basis. Microsoft and ChatGPT are in direct competition with Alphabet (GOOGL) and its Bard chat program. So far, Microsoft and ChatGPT appear to have the upper hand.
-
7
Baidu (BIDU). Baidu is roughly the Chinese equivalent of Alphabet, operating the most widely used search engine in China. Like Microsoft and Alphabet, it has developed an AI chat program, dubbed (in English) “Ernie”. Baidu also provides cloud computing services with AI capabilities, much like Amazon’s Amazon Web Services. Baidu’s stock price only recently, with a better than predicted third quarter earnings report, began to turn north from around $110 a share. The stock price has essentially ranged between $100 and $160 for most of the time since 2018 – although it did experience a brief spike up to over $350 a share in early 2021.
-
8
Recursion Pharmaceuticals (RXRX). Recursion Pharmaceuticals, along with Excscientia (EXAI), is frequently touted as one of the leading contenders among AI drug discovery stocks. Cathie Wood, manager of the Ark Innovation ETF (ARKK), has been a big believer in, and a big buyer of, Recursion. The stock’s relatively low price, currently about $6.50 a share, looks attractive to small investors who dream of getting 10x or better returns on investment. Recursion might eventually deliver on that scale, but the harsh reality of the moment is that the development and government approval of new drugs, even those powered by AI, is a long and arduous process. So, even under the sunniest of scenarios, it might take a while for investors to become millionaires, courtesy of Recursion Pharmaceuticals. Read also: Top space stocks to invest in the TU article.
Best Stock Brokers
Conclusion
Some other AI stock bets to consider include SoundHoundAI (SOUN), Palantir (PLTR), Symbotic (SYM), and Verses AI (VRSSF).
The potential that AI offers, in a myriad of applications, including healthcare and virtually every area of business operations, is undeniably exciting. However, at this stage, despite all the hype and excitement, the reality of what artificial intelligence can really deliver is yet to be proven.
Even whether it can deliver anything substantial and significant is still in question. On the opposite side from its cheerleaders, AI has some noteworthy detractors in the financial world. Some market analysts describe it as essentially a “hoax”, nothing more than “automated Wikipedia”. Additionally, the flop that was the first unveiling of Google’s Bard chat program illustrates that AI technology is still in the very early stages of development.
There are, among the companies reviewed here and other firms that are betting big on artificial intelligence, no doubt some stocks that will eventually pay off for investors in a big way. But the key word there is “eventually”. It’s not likely that the price of any AI stock today will double by tomorrow…or next week…or next month. Many stock advisory services often try to lure new subscribers by saying things like, “Just think if you’d bought Amazon when it was only 25 cents a share!” They fail to mention that it took about 10 years just for Amazon to move up from 25 cents to about $2 a share, and many more years for it to climb to its current price.
AI stocks may prove to be one of the hottest market sectors for some time to come, but investors will still need to exercise due diligence and patience to realize maximum profits from the best AI stocks.
Glossary for novice traders
-
1
Broker
A broker is a legal entity or individual that performs as an intermediary when making trades in the financial markets. Private investors cannot trade without a broker, since only brokers can execute trades on the exchanges.
-
2
Trading
Trading involves the act of buying and selling financial assets like stocks, currencies, or commodities with the intention of profiting from market price fluctuations. Traders employ various strategies, analysis techniques, and risk management practices to make informed decisions and optimize their chances of success in the financial markets.
-
3
Investor
An investor is an individual, who invests money in an asset with the expectation that its value would appreciate in the future. The asset can be anything, including a bond, debenture, mutual fund, equity, gold, silver, exchange-traded funds (ETFs), and real-estate property.
-
4
Social trading
Social trading is a form of online trading that allows individual traders to observe and replicate the trading strategies of more experienced and successful traders. It combines elements of social networking and financial trading, enabling traders to connect, share, and follow each other's trades on trading platforms.
-
5
CFD
CFD is a contract between an investor/trader and seller that demonstrates that the trader will need to pay the price difference between the current value of the asset and its value at the time of contract to the seller.
Related Articles
Team that worked on the article
Johnathan M. is a U.S.-based writer and investor, a contributor to the Traders Union website. His two primary areas of expertise include finance and investing (specifically, forex and commodity trading) and religion/spirituality/meditation.
His experience includes writing articles for Investopedia.com, being the head writer for the Steve Pomeranz Show, a personal finance radio program on NPR. Johnathan is also an active currency (forex) trader, with over 20 years of investing experience.
Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.
Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).