AI Stocks: Best Artificial Intelligence Companies To Know in 2024

AI is booming — and savvy investors are watching closely. But which artificial intelligence (AI) stocks should you be keeping an eye on?

Whether you’re looking for lucrative dividend stocks or aiming for long-term investments, this article will guide you on some of the top AI stocks in 2024. Here are some of the artificial intelligence companies that might just shape the future.

What are the best AI Stocks in 2024?

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What to look for while picking the best AI stocks to invest

Investing in AI stocks requires a good grasp of the industry. AI is a diverse field; it includes companies focused entirely on artificial intelligence, known as ‘pure plays,’ and others with broader business interests. Understanding these aspects helps you decide what kind of exposure you want in this sector.

Earnings forecasts and annual reports are critical in judging a company’s performance and financial health. You’ll want to focus on companies with consistent and growing earnings. Annual reports give you an in-depth view of a company’s activities and its financial metrics, such as the debt-to-equity ratio. You should also look at how an AI stock performs relative to an index or similar companies to gauge its competitiveness.

Analyzing a company’s growth over time is also crucial. You should consider factors like earnings and market share to assess a company’s strength and future prospects. Lastly, due to the rapid evolution of the AI industry, keeping an eye on analyst projections and research reports can be particularly beneficial. These resources provide professional insights into the overall AI landscape and the relative prospects of individual stocks.

A number of companies are currently demonstrating investing in AI stocks can produce solid returns. Many continue to announce new developments and innovations and have seen a steady rise in company value as a result. Take Nvidia, which announced in May 2023 that it would be “boosting production of its AI chips to meet surging demand.” The Nvidia stock’s price surged, as demonstrated in the figure below.

Always remember that investing carries risks, and conducting thorough research or consulting a financial advisor before making any decisions is crucial. AI companies are currently showing strong investment potential, but there are no guarantees, especially in the stock market.

Deep Dive into AI Technologies and Market Trends

The field of artificial intelligence is vast and encompasses a variety of technologies such as machine learning, deep learning, neural networks, and natural language processing. Each of these sub-fields has unique applications and is pursued by different companies with varying degrees of focus and expertise.

Machine Learning and Its Investors

Machine learning, a core component of AI, involves algorithms that allow computers to learn from and interpret data without explicit programming. Companies like Alphabet, through Google, have been pioneers in this space, developing technologies that power services from search engines to autonomous vehicles. Investors interested in this area might look at how these technologies are applied across different sectors, including healthcare, finance, and automotive, to identify stocks with high growth potential.

Deep Learning and Hardware Innovations

Deep learning, a subset of machine learning, has spurred interest in specialized hardware. Companies such as Nvidia and AMD are at the forefront, developing GPUs that are crucial for processing complex neural networks. The demand for such hardware is expected to grow as AI becomes more data-intensive and complex, making these companies attractive to investors who are focused on technological infrastructure in AI.

Neural Networks and Software Solutions

Neural networks mimic the human brain’s ability to recognize patterns and make decisions. Software companies, particularly those like C3.ai, focus on creating and deploying neural network solutions for enterprise environments. These solutions are used in various applications, from predicting maintenance needs in industrial equipment to optimizing energy usage in real-time.

Natural Language Processing: A Gateway to New Markets

Natural language processing (NLP) allows machines to understand and respond to human language, a technology that has been popularized by voice assistants like Amazon’s Alexa and Apple’s Siri. Companies specializing in NLP are exploring applications in customer service, automated content creation, and even in therapeutic settings, which could open new investment avenues.

Strategic Investment in AI

Investment strategies in AI can vary significantly depending on the investor’s risk tolerance and interest in the technology’s specific aspects. While some may prefer the stability and diversity of large tech companies, others might find the high-risk, high-reward nature of startups more appealing.

Risk Management in AI Investments

The volatile nature of the tech market requires robust risk management strategies. Diversifying investments across different technologies and sectors can mitigate potential losses. Furthermore, investors should consider the cyclical nature of tech investments, where periods of rapid growth are often followed by adjustments and corrections.

The Role of AI ETFs

For those wary of picking individual stocks, investing in AI-focused exchange-traded funds (ETFs) can be a prudent choice. These funds offer exposure to a broad array of companies involved in artificial intelligence, reducing the risk associated with individual stocks. Examples include the Global X Robotics & Artificial Intelligence ETF and the iShares Robotics and Artificial Intelligence ETF, which track companies from around the globe that are leaders in AI and robotics.

Emerging Markets and AI

Emerging markets offer a unique opportunity for AI investments. Countries like China and India are rapidly adopting AI technologies, driven by government support and massive population bases that provide vast data for AI applications. Companies operating in these regions that adapt AI for local applications could see substantial growth.

Ethical Considerations and AI

Investors must also consider the ethical implications of investing in AI. As AI technology advances, issues such as privacy, surveillance, and autonomous decision-making become increasingly significant. Companies that prioritize ethical considerations in the development and deployment of AI technologies may not only avoid regulatory pitfalls but could also be viewed more favorably by socially conscious investors.

Which AI company is listed with Nasdaq?

Nasdaq, known for its technology-centric listing, hosts many influential AI players, from tech giants such as Alphabet (Google’s parent company) and Microsoft to AI-dedicated firms like Nvidia, a leader in graphics processing units (GPUs) used in AI applications and C3.ai, a prominent enterprise AI software provider.

Companies like Alphabet and Microsoft, although not exclusively AI companies, invest heavily in AI and machine learning technologies to enhance their product offerings and are seen as significant players in the AI field. 

On the other hand, firms like Nvidia and C3.ai are more narrowly focused on AI, with their business models centered on the growth and development of artificial intelligence. 

Whether you’re looking at diversified tech giants or specialized AI firms, the Nasdaq is home to numerous companies that are contributing to the AI revolution.

What are the best AI stocks to invest in?

The surge in AI’s capabilities, exemplified by OpenAI’s latest model GPT-4, is hard to ignore in 2024. It’s estimated that AI could add $15.7 trillion to the global economy by 2030, which has led many to pay attention to artificial intelligence stocks. 

These AI stocks fall into two categories: large tech companies investing in AI and smaller, AI-focused firms. 

Though smaller firms seem like direct investments in AI, they may not be the best choices due to their need for larger infrastructures to scale their models. Standout performers within the AI stocks include NVIDIA Corporation (NVDA), and C3.ai, Inc. (AI), among others.

Investors deciding to venture into AI stocks must choose between investing in individual stocks, which carry higher risk and potential return, or in AI stock funds that spread the risk across several companies. However, investors should proceed with caution and comprehensive research when investing in AI stocks.

Is investing in AI stocks the right move?

Investors should approach the decision to invest in individual stocks or specialized ETFs with caution. Concentrated investments can bear higher risk than diversified ones, like the S&P 500 index funds, which consistently show an average annual return of about 10% without accounting for inflation.

A helpful rule of thumb to mitigate this risk is to allocate no more than 10% of your total portfolio to individual stocks. However, for those who are financially stable enough to venture into individual stocks, investing in AI stocks is an option worth considering.

Conclusion

In conclusion, while the AI industry presents exciting investment opportunities, it is essential for investors to understand the complexities and rapidly changing dynamics of the field. By combining thorough research with strategic diversification, investors can potentially capitalize on the growth of AI while managing associated risks effectively.

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