In this piece, we will take a look at the 12 best artificial intelligence stocks to buy according to analysts. If you want to skip our overview of the latest trends in the world of AI, then you can take a look at the 5 Best Artificial Intelligence (AI) Stocks To Buy According to Analysts.
When it comes to AI, the rapid rise in prominence of the technology is quite striking. If we rewind the hands of time to mid 2022, then few people would be regularly talking about the technology, and media coverage would be limited to a handful of players such as the firm behind ChatGPT, OpenAI. Yet, in just a year, AI is at the forefront of the media, investor, and even government attention as the advances in decision making offered by data science enable organizations to upscale their operations.
Since it led the stock market to rise in 2023, AI is naturally at the front of attention in 2024 as well. The first two months of a year are particularly important for markets as they provide them with the perfect data to set the tone for the rest of the year. These come in the form of earnings reports, and for the Q1 2024 earnings season, all that anyone can talk about is AI. The year started off with the Taiwan Semiconductor Manufacturing Company (NYSE:TSM) assuring investors during its earnings call that it was in a stable position to capture any growth in the demand for AI chips. Its CEO C.C. Wei shared that TSMC is working with all the major players in the global A.I. industry, as he shared:
The surge in AI-related demand in 2023 supports our already strong conviction that the structural demand for energy-efficient computing will accelerate in an intelligent and connected world. TSMC is a key enabler of AI applications. No matter which approach is taken, AI technology is evolving to use more complex AI models, as the amount of computation required for training and influence is increasing. As a result, AI model need to be supported by more powerful semiconductor hardware, which requires use of the most advanced semiconductor process technologies. Thus, the value of TSMC technology position is increasing and we are well-positioned to capture the major portion of the market in terms of semiconductor component in AI.
After TSMC, it was Intel Corporation (NASDAQ:INTC)'s turn. The world's largest chip designer and manufacturer, Intel has struggled to keep up the pace with the industry's upgrade cycles and is now aggressively targeting rapid iteration and mass production of advanced semiconductor fabrication process node technologies. Leading the charge is Intel's CEO Patrick Gelsinger, who highlighted that not only can AI become an industry that drives a "$1 trillion semiconductor TAM [TOTAL ADDRESSABLE MARKET] by 2030," but also confidently asserted that "given our foundry and product offerings, we're the only company able to participate in 100% of the TAM for AI Silicon logic."
Shifting from the hardware side of the AI industry to the software, the next duo up on the earnings stage came in the form of Microsoft Corporation (NASDAQ:MSFT) and Alphabet Inc. (NASDAQ:GOOG). As rapidly changing as AI is, if there's one thing that can be said with certainty about the software segment of artificial intelligence companies and stocks, it's that Alphabet and Microsoft sit right at the top of the global AI food chain that some estimates say has as many as 57,000 companies. Of course, the definition of an 'AI company' depends on whether you also include companies that use AI for their business processes as well as counting others who make the hardware and software. Yet, even if we include the former bunch, Alphabet and Microsoft are still likely to come out on top since their deep expertise in all things data science naturally provides them with a competitive advantage.
Alphabet CEO Sundar Pichai led with AI and aimed right for the money when he explained during the firm's earnings call for the fourth quarter that it is heavily invested in improving Search results with AI. These announcements came even as Google's advertisement revenue failed to impress investors and led to a post earnings share price drop. Like Pichai, Microsoft's Satya Nadella also talked about AI as he shared that the company had evolved from "talking about AI" to "applying AI to scale."
So, as AI continues to remain the topic in technology and finance, we decided to see what AI stocks analysts believe are worth watching out for. Some top picks are The Trade Desk, Inc. (NASDAQ:TTD), Western Digital Corporation (NASDAQ:WDC), and Microchip Technology Incorporated (NASDAQ:MCHP).
12 Best Artificial Intelligence (AI) Stocks To Buy According to Analysts
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Our Methodology
To make our list of the best artificial intelligence or AI stocks to buy according to analysts, we used the holdings of the Invesco AI and Next Gen Software ETF and ranked the firms by their average analyst share price target upside. The top stocks were chosen as the best AI stocks.
For these best artificial intelligence stocks according to analysts, we have also mentioned hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Best Artificial Intelligence (AI) Stocks To Buy According to Analysts
Alphabet Inc. (NASDAQ:GOOGL) is one of the biggest players in the AI industry and an example of how a company can lead in a sector and still not need to make money from it. Alphabet Inc. (NASDAQ:GOOGL)'s biggest business is its search engine, and during the firm's latest earnings call, CEO Sundar Pichai was quick to comment on how his firm is using AI to improve Google Search results.
For their third quarter of 2023 shareholdings, 221 out of the 910 hedge funds covered by Insider Monkey's research had held a stake in Alphabet Inc. (NASDAQ:GOOGL). Out of these, the firm's biggest hedge fund investor is Ken Fisher's Fisher Asset Management with a $5.7 billion investment.
Alphabet Inc. (NASDAQ:GOOGL) joins The Western Digital Corporation (NASDAQ:WDC), Trade Desk, Inc. (NASDAQ:TTD), and Microchip Technology Incorporated (NASDAQ:MCHP) in our list of the top AI stocks according to analysts.
Equinix, Inc. (NASDAQ:EQIX) is a real estate investment trust that works with companies to set up their network and data centers. This means that the firm has exposure to potential growth in AI computer facilities. The shares are rated Buy on average, and Equinix, Inc. (NASDAQ:EQIX) secured upgrades from Truist and Wolfe Research in January 2023.
As of Q3 2023 end, 42 out of the 910 hedge funds part of Insider Monkey's database were the firm's shareholders. Equinix, Inc. (NASDAQ:EQIX)'s largest stakeholder among these is Philippe Laffont's Coatue Management through its $457 million stake.
ANSYS, Inc. (NASDAQ:ANSS) is an engineering software company that enables engineers to design and develop complex products. This provides it with a key area to utilize AI in, and on this front, ANSYS, Inc. (NASDAQ:ANSS) announced in January 2024 that its Ansys SimAI software uses generative AI to expand access to users with limiting coding or programming language.
For their September quarter of 2023 shareholdings, out of the 910 hedge funds tracked by Insider Monkey, 32 had invested in ANSYS, Inc. (NASDAQ:ANSS). Ian Simm's Impax Asset Management was the biggest investor as it owned 640,715 shares that are worth $190 million.
Marvell Technology, Inc. (NASDAQ:MRVL) is a semiconductor firm that enables chip manufacturers to design and test their products. Its shares are rated Strong Buy on average, and the firm can benefit from any growth in global semiconductor manufacturing capacity due to AI demand.
By the end of last year's third quarter, 57 out of the 910 hedge funds covered by Insider Monkey's research were Marvell Technology, Inc. (NASDAQ:MRVL) shareholders. Out of these, the largest stakeholder was David Goel and Paul Ferri's Matrix Capital Management courtesy of its $712 million investment.
AMETEK, Inc. (NYSE:AME) is an engineering products company headquartered in Berwyn, California. While AI has become popular in 2023, the firm has been working with the technology for more than four years now. AMETEK, Inc. (NYSE:AME)'s precision electronics have been powering up deep learning servers since 2019, and have laid the path to generative AI that's on its way to becoming commonplace now.
Insider Monkey dug through 910 hedge funds for their September quarter of 2023 shareholdings and found that 38 had bought a stake in the company. AMETEK, Inc. (NYSE:AME) 's biggest hedge fund shareholder is Phill Gross and Robert Atchinson's Adage Capital Management as it owns $159 million worth of shares.
Snowflake Inc. (NYSE:SNOW) is a cloud computing company whose analytical business model stands to be one of the biggest beneficiaries of any advancements in AI. The firm has been doing well on the financial front as of late since it has beaten analyst EPS estimates in all four of its latest quarters.
As of September 2023 end, 71 out of the 910 hedge funds covered by Insider Monkey's research were Snowflake Inc. (NYSE:SNOW)'s investors. Brad Gerstner's Altimeter Capital Management was the largest investor through its $2.3 billion stake.
Intuitive Surgical, Inc. (NASDAQ:ISRG) is a robotics company that enables surgeons to use surgical medical assistants during their operations. It seeks to use AI to improve surgical decision making, and despite a commanding position in its market, Intuitive Surgical, Inc. (NASDAQ:ISRG) is racing to launch its new surgical robot as soon as the FDA gives the go ahead.
78 out of the 910 hedge funds profiled by Insider Monkey during Q3 2023 had invested in the robotics company. Intuitive Surgical, Inc. (NASDAQ:ISRG)'s biggest shareholder is Ken Fisher's Fisher Asset Management as it owns 4.4 million shares that are worth $1.2 billion.
The Trade Desk, Inc. (NASDAQ:TTD), Intuitive Surgical, Inc. (NASDAQ:ISRG), Western Digital Corporation (NASDAQ:WDC), and Microchip Technology Incorporated (NASDAQ:MCHP) are some AI stocks that analysts cannot stop gushing about.
