Have you ever heard anyone say, “If you had invested in Microsoft in the ’86, it would be worth over $3 million today!” It sounds like an exaggeration, but it is, in fact, a true statement. Something very similar could be said about Apple or Facebook. We all know by now that when there is an emerging technology, there are often great investment opportunities. However, how many of us actually take advantage of them?
Biggest Opportunity in History?
Regarding AI technology, some say this is the ultimate investment opportunity of our lifetime, something that may make the dawn of computer companies seem like insignificant growth in comparison, making millionaires in only a few years with just a few small investments.
Don’t Miss Out
No one really knows what the future holds for this technology, but if AI were to match the hype, wouldn’t it be great to be prepared this time? In this article, we will look at some of the companies selling stock that will possibly increase by manyfold and yield eye-watering returns. I wanted to write this article so that if this happens, you won’t miss out.
Table of Contents
If you are new to AI, the beginning of the article may help you get a feel for what this technology is all about, but if you are just looking for a list of stock tips, use the Table of Contents to skip around and to the end to find our top picks. Don’t forget to check out the videos we include, because they are full of additional tips.
Please note that none of this is financial advice. Please do your due diligence when investing capital and only invest what you can afford to lose!
Table of Contents
Understanding AI and the Market
The market for AI technologies and AI stocks is expected to grow rapidly as AI begins to revolutionize several industries.
Machine Learning
One essential aspect of AI technology is machine learning, which enables computers to learn patterns and make decisions without being explicitly programmed. Machine learning algorithms are used in various applications, from self-driving cars to recommendation systems and natural language processing.
Investing in AI Stocks
The stocks that are likely to increase most dramatically are those that are associated with the production of the most desirable technology. For example, some of the leading tech companies in the AI market are Microsoft, Adobe, and Nvidia. We will be talking about that in more detail below.
Both Big and Small Companies
We will be considering both established technology companies and smaller, more innovative companies focused on developing new AI technologies. Investing in both well-established companies and smaller startups can be a good way to capture the huge growth potential of smaller companies while controlling the risk associated with smaller companies in an emerging market.
View the video below from the YouTube channel “Our Rich Journey” to get an overview of the technology, what it is, and how to get started investing in AI.
Key AI Companies to Watch
As the artificial intelligence (AI) industry continues to grow, there are several key companies that are leading the way as prime investment opportunities. These companies have developed significant advancements in AI, positioning themselves at the forefront of the technology.
NVIDIA is a major player in the AI space, known primarily for its graphics processing units (GPUs). Its GPUs are widely used to support machine learning and AI developments, making NVIDIA a top choice for investors.
Alphabet, the parent company of Google, has been investing heavily in AI research and development. Google’s AI-focused divisions, such as DeepMind and Google Brain, offer unmatched potential, making Alphabet a strong contender in the AI sector.
Amazon is not just an e-commerce giant but also a leader in AI innovation. Its cloud computing arm, Amazon Web Services (AWS), provides AI and machine learning tools to businesses, further cementing Amazon’s position in the market.
Microsoft has made its Azure cloud computing platform central to its AI strategy. With a diverse range of AI products and platforms, including AI chatbots and development tools, Microsoft is a heavyweight in the industry.
Meta Platforms (formerly Facebook), the parent company of Facebook and Instagram, is also making advancements in AI. Its investments in AR/VR devices and AI-powered Natural Language Processing cement its position as an innovative player in the market.
OpenAI is a private AI company founded by Elon Musk, among others, that has developed industry-leading technologies like ChatGPT. Although not publicly traded, OpenAI’s research and focus on ethical AI positions it as a company to watch.
C3.ai is a smaller, more specialized software company that develops AI applications for various industries, including energy, healthcare, and finance. Its focused approach makes it an appealing choice for investors.
IBM has been a pioneer in computing technologies and remains at the cutting edge of AI developments. Its Watson AI system and related services are used by businesses across the globe.
Anthropic and Symbotic are two startups that are making strides in AI research and pushing the boundaries of what is possible. Though not publicly traded yet, their innovative approaches make them noteworthy players in the AI domain.
Technological Innovations in AI
Artificial intelligence (AI) has advanced in part by machine learning and deep learning. While machine learning has been around for some time, the rise of deep learning has brought new capabilities and applications to AI.
One prominent development in AI is the emergence of generative AI, which allows systems to create new content, such as images, music, and text. This has been largely driven by the power of deep learning and its ability to process vast amounts of data. For those who want to delve deeper into the inner workings of deep learning, this comprehensive beginner’s guide is an excellent starting point.
The power of generative AI is further showcased in the creation of sophisticated chatbots. These virtual assistants rely on advanced language models that can understand and produce human-like text, often simulating conversation and even passing the Turing Test in some cases. The revolution in AI language models has enabled the development of highly interactive chatbots for various applications, ranging from customer support to personal assistants and virtual companions.
Several noteworthy technological innovations have emerged within the AI landscape:
- Deep learning: Powerful neural network architectures that can automatically learn features and patterns from large datasets.
- Generative AI: Systems capable of creating new content such as artwork, music, or text, as demonstrated by cutting-edge chatbots.
- Language models: Advanced ML models that process natural language, enabling comprehensive understanding and generating human-like text.
Examples of Stocks in These Areas
Deep Learning:
- Nvidia (NVDA) – A leader in GPUs that power deep learning and AI.
- Intel (INTC) – Makes CPUs and other chips used for deep learning training.
- Advanced Micro Devices (AMD) – Competes with Nvidia and Intel in AI silicon.
Generative AI:
- OpenAI – A private company but partners with Microsoft (MSFT) on AI safety and ethics.
- Anthropic – An AI safety startup that could go public. Partnered with MSFT.
- DeepMind (owned by GOOG) – Pioneers in generative models like AlphaFold.
Large Language Models:
- Microsoft (MSFT) – A leader in conversational AI through products like ChatGPT.
- Google (GOOG/GOOGL) – Develops LLMs through DeepMind and other research groups.
- Amazon (AMZN) – Powers AI assistant Alexa with LLMs and natural language processing.
Brian, from “BWB,” covers some of the best stocks in this area in the video below.
Investment Strategies in AI Stocks
Exchange Traded Funds
On the other hand, AI Exchange Traded Funds (ETFs) provide a diversified approach to investing in AI. Investors can access a multitude of AI stocks, from blue-chip giants to smaller companies that specialize in cutting-edge AI technologies. A couple of top examples of popular AI ETFs are: Global X Robotics & Artificial Intelligence ETF (BOTZ), which focuses on a lot on health care companies pioneering AI robotics such as Nvidia, and Roundhill Generative AI & Technology ETF (CHAT), which focuses on OpenAI, Google’s Bard, and Elon Musk’s Grok.
Blue Chip Stocks
Some of the obvious picks are the big, well-known companies that are really pushing into the field of AI, like Mircosoft, Alphabet (Google), and Amazon. This is because it is essential to analyze the profitability of potential AI stocks, meaning companies that generate consistent income growth.
Valuation
The valuation of a company can be calculated by multiplying the company’s share price by its total number of shares outstanding (I.e. number held by all its shareholders combined). Investors can compare the valuation multiples of different companies to determine if they are fairly priced. High-growth stocks may have very high valuations, but a careful analysis can help identify undervalued opportunities in the AI space.
AI Applications Are Everywhere
You wouldn’t be here on this page if you didn’t already believe in the future of AI, but what are you going go to say to your spouse or financial planner if they think this is all hype? Here is a list of markets that are being transformed by this technology.
E-commerce
In e-commerce, AI-driven systems already analyze consumer data to personalize marketing strategies, optimize pricing, and enhance customer experiences. Retailers can leverage AI to improve inventory management and supply chain efficiency.
Analytics
AI-powered analytics allow for automating processes, and offering predictive capabilities in all kinds of areas. For example, businesses can use advanced data analytics to identify trends, improve decision-making, and optimize operations.
Cybersecurity
In the realm of cybersecurity, AI has become an essential tool in safeguarding digital infrastructure and combating cyber threats. Machine learning algorithms can detect and prevent attacks by analyzing patterns in network activity and adapting to emerging threats.
Healthcare
Healthcare is another domain where AI is advancing, with applications ranging from diagnostics and patient monitoring to drug discovery and personalized medicine. AI algorithms can analyze vast amounts of data to identify potential health risks and provide accurate diagnoses, enabling better treatments.
Financial services
The financial services industry is also embracing AI for fraud detection, risk assessment, and streamlining operations. Artificial intelligence can process massive amounts of transactional data, flagging anomalies and potential risks in real time.
Insurance
Insurance companies are leveraging AI to assess claims, estimate costs, and automate customer service. Advanced algorithms can identify patterns in historical data to offer more accurate pricing and underwriting models.
Content creation
AI is transforming content creation, enabling platforms to generate tailored content for diverse audiences, automate content moderation, and optimize advertising strategies. Innovative solutions like natural language processing and computer vision enhance user engagement and maintain content relevance.
According to “Best of Us Investors,” the seven best AI stocks are AEHR Systems, Extreme Networks, Alphabet, Meta, Microsoft, Nvidia, and Super Micro Computer. See the man himself break down why in the video below!
Cloud Computing and AI Services
Cloud computing has revolutionized the way businesses and individuals access and utilize computing resources, now including artificial intelligence (AI) services.
These stocks give investors ample opportunities to capitalize on the growth potential of companies involved in cloud infrastructure services and AI tools.
Amazon Web Services and Microsoft Azure, which are major cloud providers, now offer a lot of AI services. For example, Azure provides businesses with a wide range of AI tools to build their own AI platforms. From machine learning models and pre-built AI services to conversational AI and cognitive services, Azure can host and deploy these products on behalf of your business.
Amazon Web Services (AWS) offers a comprehensive suite of AI services as well, for example:
- AWS SageMaker: a fully managed service for building, training, and deploying machine learning models
- Amazon Rekognition: a deep learning-based image and video analysis service
- Amazon Lex: a service for building conversational interfaces
AI in Hardware and Computing
The advancement of artificial intelligence (AI) technologies has created unprecedented demand for high-performance hardware and computing solutions. In response to this demand, various tech companies have focused on designing and manufacturing specialized components, such as microchips and graphics processing units (GPUs), to enhance the capabilities of AI-driven systems.
Nvidia
Nvidia Corp has emerged as a prominent player in the AI hardware landscape, primarily due to its powerful GPUs. These graphics processing units are essential for running complex AI algorithms and facilitating deep learning processes. Additionally, Nvidia’s data center solutions have become an integral part of many organizations’ AI infrastructure, providing the required processing power and efficiency.
Micron Technology
Another notable company in the AI hardware and computing domain is Micron Technology. Micron is known for producing high-quality memory components, such as DRAM and NAND flash memory, crucial for AI-driven systems that need large amounts of memory to process vast amounts of data. These memory components have made Micron a vital part of the AI supply chain.
To better illustrate the contributions of these companies, let’s examine some key features that distinguish their AI hardware solutions:
- High-Performance Processing: The GPUs and microchips produced by companies like Nvidia and Micron are capable of handling immense workloads, allowing AI systems to process data and tasks faster and more efficiently.
- Scalability: As AI applications grow in complexity, hardware must be adaptable to accommodate these expanding demands. Both Nvidia’s GPUs and Micron’s memory components have proven themselves to be scalable solutions, enabling AI systems to evolve alongside advancing technology.
- Energy Efficiency: With data centers consuming substantial amounts of energy, it’s crucial that AI hardware components are energy-efficient. Companies like Nvidia are working to develop energy-conscious solutions to minimize the environmental impact of these compute-intensive applications.
These stocks and others like them make great investments, and if you are interested in a deeper dive into these and other similar stocks, check out the video below from “Chip Stock Investor.”
Robotics and Autonomous Systems
Robotics and autonomous systems are some of the most promising sectors in the field of artificial intelligence (AI) for future investment potential.
Self-Driving Cars
One of the most prominent applications of AI in robotics is self-driving cars. The race to develop fully autonomous vehicles has led to substantial research and development efforts by both established automotive companies and technology-driven start-ups. This has resulted in significant breakthroughs, such as advanced perception and real-time decision-making capabilities, which have the potential to revolutionize the automotive industry.
Planning Systems
AI-driven planning systems are playing an increasingly important role in various fields. These systems are capable of optimizing complex logistical workflows, manufacturing processes, and supply chain management, significantly improving efficiency and reducing costs. Companies that specialize in AI-based planning solutions may offer attractive investment opportunities, particularly as more industries recognize the benefits of integrating such systems into their operations.
Some good examples of some companies selling stocks in the area of robotic automation would be Rockwell Automation (ROK), which is involved in automotive and healthcare, and Intuitive Surgical (ISRG) which creates robotics for surgical procedures.
For a deeper look at these and even more stocks in these areas, see the video below from “BWB.”
My Overall BEST for AI Stock Picks
So what is the bottom line? What stocks am I planning to invest in? What are the best picks for the near term, let’s say, 2024? I think the below stocks probably have the most potential for explosive growth over the next couple of years.
Extreme Networks (EXTR)
Extreme Networks designs, develops, and manufactures wired and wireless network infrastructure equipment, including switches, routers, and wireless access points. This company offers cloud-managed network solutions and software-defined networking technologies to help enterprises deploy and manage networks efficiently. This has been a successful company with over 7,000 employees and serving over 50,000 customers globally.
NVIDIA (NVDA)
NVIDIA is a major player in the AI space, known primarily for its graphics processing units (GPUs). Its GPUs are widely used to support machine learning and AI developments. Since this is a company that has a lot of success under its belt, and over 25,000 employees, the value may already be priced in for the short term. However, it is still projected to grow substantially, and with it already being successful, it can be a much safer bet if you are naturally risk-adverse.
My Favorite Pick?
AEHR Test Systems (AEHR). Aehr Test Systems is a semiconductor test and burn-in supplier that develops and manufactures systems for testing logic, memory, and other components and devices, like optical and memory-integrated circuits. They screen for defects by applying unique burn-in patterns to integrated circuits during the manufacturing process, which helps ensure high product yields and reliability. As demand for these services increases, this smaller company (still under 300 employees) could see surprising growth in both the near and long term. If you are looking for something with the potential for big performance, this is my pick. Some projections have this stock growing in value by over 100% in 2024 alone.
Some honorable mentions for growth:
Upstart Holdings
Investing in reputable AI companies becomes more favorable as they continue developing groundbreaking technologies and forging new partnerships. Upstart Holdings, for example, distinguishes itself in the financial sector by utilizing AI algorithms to offer personalized loan options to consumers. Their innovative approach allows for more accurate risk assessments and streamlined lending processes, making it an attractive investment for the future.
Advanced Micro Devices
Advanced Micro Devices (AMD) has also shown immense potential in the AI industry. Known for its high-performance computing hardware, AMD’s products are critical for supporting AI systems that require substantial processing power. As the demand for AI capabilities increases, the need for powerful computing solutions will also rise, positioning AMD as a strong contender in the AI investment landscape.
UiPath
Another company to look out for in the AI space is UiPath Inc., which focuses on robotic process automation (RPA). This technology aims to improve business efficiency by automating repetitive tasks, thus enabling employees to concentrate on more complex projects. As companies continue to seek cost-effective solutions to optimize their workflows, UiPath’s RPA technology holds significant appeal for investors.
Axcelis Technologies
Axcelis Technologies (ACLS) – Supplies Purion ion implantation systems used in AI chip manufacturing. These are used by chipmakers like Intel, Samsung, and TSMC to introduce dopants into silicon wafers. The company designs, manufactures, and services ion implantation and other processing equipment used in the fabrication of semiconductor chips. This includes systems for 3D NAND flash memory and power devices. Projected 35–40% revenue growth.
One More Tip…
It is essential to remain vigilant about this AI hype creating potential bubbles, and I think because of that, this MAY NOT be the exact moment to buy. However, astute investors can potentially get in on the ground floor of some of these opportunities and make long-term gains that could generate potentially generational wealth. Don’t plan to look back in regret. Do yourself a favor and plan to take action.
Frequently Asked Questions
Which AI companies are considered the best long-term investments?
Some of the best long-term investments in AI companies include giants like NVIDIA, Microsoft, and Alphabet. These companies have a history of innovation and market leadership in various AI applications, making them potential candidates for strong future growth.
What are some promising small-cap AI stocks?
Promising small-cap AI stocks may include startups and lesser-known companies pushing the boundaries of AI technologies. While these investments tend to be more speculative, some stand out due to their unique products or business models. Remember that small-cap stocks can carry higher risks than larger, established companies.
Here are some examples:
SoundHound AI (SOUN) – A speech recognition company that provides voice AI solutions for clients. Currently has a market cap around $350 million. ([source: 7 Small-Cap AI Stocks to Buy Before They Boom – Yahoo Finance])
Nerdy (NRDY) – Provides online and in-person learning for K-12 students. Has a market cap of around $280 million. ([source: 7 Small-Cap AI Stocks to Buy Before They Boom – Yahoo Finance])
Recursion Pharmaceuticals (RXRX) – Applies AI to biomedical research. Has a market cap of around $800 million. ([source: The Best 5 Small Cap AI Companies to Buy Now – MarketBeat])
Duos Technologies (DUOT) – Provides AI-based security and process automation solutions. Has a market cap around $50 million. ([source: The Best 5 Small Cap AI Companies to Buy Now – MarketBeat])
How to find which AI-focused startups are going public, making their stocks available for investment?
To stay updated on AI-focused startups going public, it’s essential to follow financial news and stock market trends. Companies may announce their intentions through press releases, stock exchange filings, or investor presentations. Specific companies and their IPO dates may change, so it’s crucial to monitor the market for the latest information.
Here are some examples:
DataRobot (AI automation platform) ([source: Upcoming IPOs 2024: 50+ Startups in the IPO Pipeline – Access IPOs])
Cogniac (AI computer vision startup) ([source: Upcoming IPOs 2024: 50+ Startups in the IPO Pipeline – Access IPOs])
Cohere (AI startup focused on language models) ([source: The 10 Top Technical and Business Trends of 2024 | Inc.com])
Are there any low-cost AI stocks that offer potential for growth?
Low-cost AI stocks can provide an opportunity for investors looking for growth potential at a more affordable entry price. These stocks typically belong to smaller companies or startups and can carry more significant risks and rewards. It’s essential to research each low-cost stock thoroughly and understand the company’s prospects before investing.
Here are some examples:
Anthropic (AI company focused on AI safety research) – Currently a private company, but stocks can still be obtained at Forge Global, which trades around $2-3 per share. Has gained over 100% in the last year.
C3.ai (AI software company) – Currently trades around $15 per share. Revenue grew 16% last quarter.
DataRobot (AI automation platform) – Currently trades around $10-15 per share. Analysts project 20-30% revenue growth over next few years.
UiPath (RPA software company) – Currently trades around $13 per share. Analysts see potential for continued strong subscription revenue growth.
Palantir (Data analytics company involved in AI projects) – Currently trades around $8 per share. Government contracts provide recurring revenue stream.
What insights are available on the best AI stocks according to investor discussions on Reddit?
Investor discussions on platforms like Reddit can provide insights into popular AI stocks, market sentiments, and investment strategies. However, it is crucial to approach such discussions with caution, as opinions may be biased or unfounded. Always conduct thorough research before making investment decisions, and consider consulting a professional financial advisor.