10 Top Performing AI Stocks for 2024

AI is increasingly vital across various sectors. It enhances business efficiency by automating processes, tailoring customer interactions, and refining operational tactics. The surge in investment interest in AI stocks, particularly following the global impact of OpenAI’s chatbot ChatGPT, underscores AI technologies’ significant, enduring value. If you are one of the optimistic investors wanting to bet on the future of AI, this blog is for you. This blog will detail the leading AI companies to consider for investment in 2024.

Computers are adept at handling extensive numerical calculations but need help with tasks that humans find intuitive, such as language processing, object manipulation, visual perception, planning, reasoning, and learning. Artificial intelligence (AI), along with its subsets like deep learning and machine learning, enables computers to undertake functions traditionally associated with human intellect, including language generation and facial recognition.

What Are AI Stocks?

AI stocks refer to shares of companies actively involved in the artificial intelligence sector. As technology firms recognize AI’s value, many have either established new AI-focused branches or partnered with leading global companies to tap into the AI market. Additionally, numerous startups are preparing to go public to secure funding for themselves and their investors.

These stocks encompass various AI applications, from hardware and software to cloud computing and robotic process automation (RPA). Investing in AI stocks generally supports the development of AI technology or its applications across various industries.

Like other types of stocks, AI stocks fall into two categories:

Firstly, large, established tech companies (often called blue-chip companies) have invested in AI technologies or formed partnerships in the AI sector. These firms have the necessary resources, infrastructure, and capital to develop and extensively implement AI technologies. Investors often view these companies as more secure due to their solid market position and financial health.

Secondly, smaller, newer companies focus solely on AI development. These firms often invest more directly in AI technologies but carry greater financial risks. Although these companies may create groundbreaking AI models, they frequently lack the means to market these innovations independently. They typically must seek partnerships or acquisitions by larger entities to bring their products to market.

Should You Invest in AI Stocks in 2024?

Investing in AI stocks in 2024 might be a wise decision, yet it requires a solid grasp of the industry context. AI remains a significant driver of change in various industries, with leaders such as NVIDIA, Microsoft, and Alphabet at the forefront. These companies have experienced considerable growth from their AI initiatives and seem well-placed to gain further as AI’s role expands in different areas.

Nevertheless, the AI market has its challenges. It is fiercely competitive, and shifts in regulations or technology could affect these companies’ growth trajectories. Additionally, while companies like NVIDIA have demonstrated strong returns, their high stock valuations might contribute to market volatility.

Investing in AI-focused ETFs could offer a more balanced approach for those hesitant to choose specific stocks. These ETFs represent a variety of firms, both developing AI and those likely to benefit from its advancements, providing a broader, less risky investment option while still tapping into the sector’s expansion.

Top 10 AI Stocks to Invest in 2024

(*All the information related to Market Cap, Current Price, and Year-Over-Year (YoY) Performance is current as of 3rd September 2024)

Here are the top 10 AI stocks you should focus on in 2024 (All data source: Google Finance:

1. Nvidia (NVDA)

Nvidia has made significant gains from the AI expansion, with its GPUs now critical in data centers worldwide. Created for gaming, these graphics cards are pivotal in machine learning training and inference stages, especially in the expanding field of generative AI.

The increased need for AI infrastructure has made Nvidia’s data center business the company’s top revenue generator. Throughout 2023 and into 2024, Nvidia has experienced significant financial growth, leading to a noticeable rise in its stock value. Nvidia’s GPUs are particularly in demand for the complex tasks required by large language models and other AI applications.

Recently, Nvidia introduced the HGX H200, an advanced AI computing platform using the Hopper architecture. This platform is equipped to manage the extensive computational demands of generative AI and high-performance computing applications. Set to be available from mid-2024, the HGX H200 features the H200 Tensor Core GPU with upgraded HBM3e memory, offering major speed and memory capacity improvements over earlier versions.

2. PROCEPT BioRobotics (PRCT)

PROCEPT BioRobotics, a company engaged in surgical robotics, develops minimally invasive tools for urologic surgeries. Their primary product, the AquaBeam Robotic System, utilizes Aquablation therapy to address benign prostatic hyperplasia (BPH). This procedure, which involves a robot-assisted, heat-free waterjet, uses real-time ultrasound for a clear view of the prostate, enabling accurate tissue removal while preserving critical sexual and urinary functions.

In 2023, PROCEPT BioRobotics announced its plans to incorporate artificial intelligence (AI) into its Aquablation therapy. This enhancement uses data from many procedures to improve the system’s performance using AI and machine learning. The latest outcome of this effort is the HYDROS Robotic System. HYDROS incorporates AI-powered treatment planning with its FirstAssist AI, which employs advanced image recognition to recommend the best treatment plans. Integrating AI aims to make the procedure more consistent and simplify its execution, enhancing precision for surgeons.

3. Microsoft (MSFT)

Microsoft has increased its investments in AI, building on its partnership with OpenAI. In addition to investing billions in OpenAI, Microsoft has developed its AI-driven products, such as Bing AI and Copilot, utilizing technology licensed from OpenAI since 2020.

In 2023, Microsoft incorporated Bing AI into the Windows 11 search bar, which is accessible via Microsoft’s Edge browser and also compatible with Chrome and Safari browsers. This integration is part of Microsoft’s strategy to fully incorporate AI into its ecosystem.

Microsoft’s proactive expansion into generative AI has increased revenues for its Azure cloud computing service, helping its market value exceed $3 trillion in January 2024. In May 2024, Microsoft launched its first series of AI-powered personal computers, Copilot+ PCs. These computers, equipped with advanced AI features, aim to boost productivity and creativity by processing AI tasks directly on the devices, using built-in neural processing units (NPUs).

4. Advanced Micro Devices (AMD)

AMD announced strong results for Q2 2024, with a significant increase in demand for AI-related products driving performance. The company’s data center revenue more than doubled from the previous year, reaching a record $2.8 billion. This growth was largely attributed to strong sales of its Instinct accelerators, including the MI300 series. This represented a 115% increase in data center revenues and outlined AMD’s expanding role in the AI market, where it competes with Nvidia.

AMD’s AI-enabled Ryzen processors have also contributed to growth, especially in the client segment. These processors are noted for their top performance and advanced neural processing units, and they have been in high demand from major OEMs like HP and Lenovo. The Ryzen AI 300 series launch has been successful, leading to a 49% increase in client segment revenue year-over-year.

Despite a nearly 40% drop from its March 2024 highs, AMD’s robust performance in the AI sector and its strategic investments make it an attractive option for investors interested in the expanding AI technology market.

5. MicroStrategy (MSTR)

MicroStrategy, a company known for its enterprise analytics and mobility software, has been enhancing the AI features of its MicroStrategy ONE platform. In 2023, the company grew its partnership with Microsoft by integrating its advanced analytics tools with the Azure OpenAI Service. This collaboration aims to empower businesses to maximize their data usage by incorporating AI-driven insights directly into their workflows. MicroStrategy also integrates its analytics capabilities with Microsoft 365, Teams, and PowerPoint, facilitating easier access to AI-powered analytics across various platforms.

Over the last two years, MicroStrategy has capitalized on two major trends: AI and cryptocurrency. The company has accumulated 190,000 bitcoins, making it the largest corporate holder of bitcoin worldwide. This focus on AI innovation and strategic cryptocurrency investments has uniquely positioned MicroStrategy in the market, merging advanced technology with a robust financial strategy.

6. Taiwan Semiconductor Manufacturing (TSM)

TSM remains a major contributor to the AI-driven semiconductor market, gaining substantially from the high demand for advanced chips. In the second quarter of 2024, TSMC reported revenues of $20.82 billion, a 32.8% increase from the previous year and a 10.3% increase from the previous quarter. This growth is primarily attributed to robust demand for advanced 3nm and 5nm technologies, especially in the AI and high-performance computing (HPC) sectors. Consequently, TSMC has increased its 2024 revenue growth forecast to just above the mid-20% range. Additionally, Taiwan Semi leads the foundry business, producing over 60% of the world’s logic semiconductors.

Despite its strong market position, TSMC’s stock is still reasonably priced, trading at 25 times forward earnings, which is appealing considering its growth potential. With limited competition in leading-edge production, TSMC is expected to continue leading the market, particularly as demand for AI technologies is projected to increase through 2026.

7. Alphabet Inc (GOOGL) (GOOG)

Alphabet Inc., the parent company of Google and YouTube, has increasingly used AI and automation. Google initially launched its Bard AI chatbot in March 2023, but in December 2023, it was rebranded as Gemini. This change introduced Google’s most sophisticated AI model yet, Gemini Ultra 1.0, which is equipped to manage complex tasks, including coding, logical reasoning, and collaborative creativity.

Gemini technology has also been integrated into a broad range of Google products. A notable addition is the AI Overview feature, which offers AI-generated summaries at the top of Google search results. This feature aims to enhance the user experience by providing relevant information swiftly. This feature is a key part of the “Gemini era,” highlighting Google’s dedication to leading in AI innovation.

Furthermore, Google has launched a dedicated Gemini app, improving accessibility for mobile users. Gemini is also essential in Google’s Workspace and Cloud services, contributing to their significant expansion. Alphabet’s strategy to incorporate Gemini into its main products emphasizes its deep commitment to AI.

8. Meta Platforms Inc. (META)

Meta Platforms Inc. is advancing its use of AI across its applications, focusing especially on WhatsApp. In September 2024, Meta announced its intention to launch AI-powered customer service chatbots for businesses on WhatsApp. These chatbots, integral to Meta’s AI strategy, aim to equip businesses with sophisticated customer engagement tools, such as text summarization, creative assistance, and language translation.

This initiative is in line with CEO Mark Zuckerberg’s goal to broaden the accessibility of Meta’s AI technology, which could transform the competitive landscape by reducing prices and expanding market share. WhatsApp’s AI features are supported by Meta’s LLaMA (Large Language Model Meta AI) 3.1, which offers enhanced user interactions through a variety of functions, transforming the platform into a comprehensive tool for business operations.

9. Adobe Inc. (ADBE)

Adobe uses its AI technologies, including the Firefly generative AI model and Sensei AI, to improve its creative and marketing software. Firefly has been integrated into widely used applications like Photoshop, Illustrator, and Adobe Express, allowing users to create content more efficiently.

Trained on a carefully selected dataset that includes Adobe Stock images and public domain content, Firefly ensures that the generated outputs are suitable for commercial use and respect intellectual property rights. This initiative aligns with Adobe’s broader goal of supporting creators and helping them monetize their work through platforms like Adobe Stock.

Beyond Firefly, Adobe continues to utilize its Sensei AI across its product suite, including Adobe Analytics, Campaign, and Target. These tools employ AI to assist businesses in personalizing customer interactions, refining marketing strategies, and analyzing large data sets to extract actionable insights.

10. AeroVironment (AVAV)

AeroVironment has strengthened its position in the defense industry by acquiring Tomahawk Robotics in September 2023 for $120 million. This acquisition brings Tomahawk’s AI-enabled control system, Kinesis, into AeroVironment’s portfolio. Kinesis, which allows the management of multiple unmanned systems through a single interface, enhances AeroVironment’s capabilities by providing improved situational awareness and control, essential for modern battlefield operations.

The integration of Tomahawk’s AI technology with AeroVironment’s unmanned systems facilitates more efficient operation across various platforms, increasing the adaptability and effectiveness of these systems in different combat scenarios. This acquisition is expected to strengthen AeroVironment’s standing in the defense sector, particularly as rising geopolitical tensions, such as those in Ukraine and the Middle East, drive demand for advanced defense technologies.

With Kinesis already in use by the US Department of Defense and allied nations, AeroVironment’s ongoing integration of AI into its systems will likely boost its market presence and operational capabilities, positioning the company to take advantage of the continued AI-driven advancements in military technology.

How to Invest in AI Stocks?

If you’re starting with stock trading and interested in AI stocks, open a brokerage account. Online brokers like E*TRADE, Merrill Edge, and Interactive Brokers offer commission-free trading, which benefits beginners. Choose a platform that meets your investment goals, considering factors such as fees, account minimums, and research tools available.

After setting up your brokerage account, decide how to invest in AI stocks. You can invest directly in individual AI companies like NVIDIA, Microsoft, or Amazon, which require more research and involve higher risk. Alternatively, you can invest in AI-focused Exchange-Traded Funds (ETFs) for a broader, less risky strategy.

AI ETFs like the iShares Exponential Technologies ETF (XT) or the Roundhill Generative AI & Technology ETF (CHAT) are suitable options for those who prefer a diversified investment. These funds include a range of AI stocks managed by professionals, allowing you to invest in the overall AI sector without the need to select individual stocks.

Conclusion

AI stocks present significant opportunities for investors in 2024, driven by the rapid advancements and integration of AI across various sectors. Leading companies like NVIDIA, Microsoft, and Alphabet have shown strong performance, underpinned by their substantial investments and innovations in AI.

While large, established firms offer stability and robust growth potential, emerging companies focusing solely on AI development present high-reward opportunities, albeit with greater risk. AI-focused ETFs provide diversified exposure to the sector for those seeking a balanced approach. As AI continues transforming industries, carefully chosen investments in this space could yield substantial returns, but staying informed and mindful of the associated risks is essential.

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