3 AI Stocks to Watch Right Now in 2024
BY TIO Staff
|February 22, 2024As more companies are using AI in their products and services, there are a few standout market leaders: NVIDIA, Alphabet, and Microsoft. These 'big three' are pioneering new AI technologies and have shown strong stock performance over recent years.
In this article, we look into these industry giants, exploring their roles in shaping the future of AI and why they remain top contenders for investors seeking to capitalize on AI. We will unravel the stories behind NVIDIA's ground breaking GPU innovations driving AI forward, Alphabet's multifaceted AI endeavors spanning from search algorithms to autonomous vehicles, and Microsoft's comprehensive AI integration across its suite of products and services.
We aim to provide you with valuable insights into why you should pay close attention to them in 2024.
Keep reading to learn more.
What are AI stocks?
Artificial intelligence (AI) has become one of the most transformative technologies of our time, with the potential to revolutionize major industries. As AI continues seeing rapid advancements and widespread adoption, a new class of stocks have risen: AI stocks.
AI stocks represent companies that are actively involved in the research, development, or deployment of artificial intelligence technologies. These companies leverage AI to enhance their products, services, and operational efficiency across various industries, including technology, healthcare, finance, automotive, and more.
For investors, AI stocks offer an interesting opportunity to invest in the future of artificial intelligence. They often seek out companies that demonstrate significant advancements in AI research, possess strong intellectual property portfolios, and have a track record of successfully integrating AI into their business strategies.
In particular, AI stocks appeal to investors and traders for several reasons:
Growth potential
Companies at the forefront of AI innovation enjoy vast growth opportunities as they roll out transformative new products and services. Investors are keen to capitalize on the upside.
Competitive edge
AI offers companies a competitive advantage. The technology allows them to operate more efficiently, make data-driven decisions, and differentiate their offerings.
Future prospects
Given AI's big potential across industries, stocks of AI leaders are future-facing investments. Investors recognize these companies are building the technologies of tomorrow.
How to get involved in AI stocks
The most straightforward and simplest way to get in on AI stocks is to purchase share CFD’s of companies. Keep in mind that investing or trading in stocks carries risks, so it's a must to do your homework. Staying informed about advancements in AI technology and market trends can help you make better informed decisions.
Here are 3 AI stocks to watch right now
NVIDIA
NVIDIA Corporation (NVDA) started in 1993 as a provider of graphics processing units (GPUs) primarily catering to the gaming industry. Since then, NVIDIA has transformed into a global leader in artificial intelligence (AI) and visual computing. Leveraging its GPU technology, NVIDIA has become instrumental in accelerating AI workloads across various industries. Its GPUs are widely used in data centers, autonomous vehicles, healthcare and finance, and more.
Specifically, NVIDIA's Volta GPU architecture provides major performance enhancements for deep learning and other AI workloads. The Tesla V100 data center GPU, built on Volta, delivers the equivalent performance of 100 CPUs for deep learning training. On the software side, NVIDIA has invested heavily in AI frameworks and developer tools. These products accelerate AI workflows for researchers, data scientists, and developers.
Additionally, NVIDIA offers end-to-end AI platform solutions to simplify deployment and optimize results. This includes the NVIDIA DGX systems for enterprise AI and the NVIDIA Drive platform for autonomous vehicles.
- Market dominance in AI hardware - NVIDIA maintains over 90% market share in AI-optimized GPUs. The company is far ahead of competitors in technical specifications and software capabilities critical for neural network training and inferencing. This market leadership fuels NVIDIA's growth as AI adoption spreads.
- Strategic partnerships - NVIDIA GPUs are the AI platform of choice for major technology and industrial companies. Key partnerships provide reach across industries applying AI, from automotive and healthcare to smart cities and robotics.
- Research and innovation - NVIDIA invests billions in R&D to rapidly enhance its AI platform. Breakthroughs like the Tensor Core GPU architecture underscore NVIDIA's commitment to pioneering AI capabilities. The company incubates new techniques at its AI research labs.
- Software Ecosystem - The NVIDIA CUDA programming framework and libraries like cuDNN enable developers to easily leverage NVIDIA GPUs for AI workloads. NVIDIA also offers AI cloud services and industry-specific AI toolkits.
- Revenue growth - NVIDIA generates significant and expanding revenue from its data center and automotive AI businesses. Investors have an opportunity to benefit as AI permeates diverse sectors.
AI is growing across virtually every industry and is dramatically expanding NVIDIA's addressable market. From healthcare to finance to transportation, NVIDIA GPUs are powering cutting-edge AI applications.
Emerging technologies like autonomous vehicles, smart cities, and the metaverse are areas where NVIDIA is exceptionally well-positioned to capitalize on. NVIDIA's end-to-end AI platform enables customers to develop and deploy advanced AI systems.
NVIDIA's acquisition of ARM has the potential to further solidify its AI leadership by combining NVIDIA's GPUs and software with ARM's CPU expertise across mobile, computing, and networking.
With its singular focus on AI and massive R&D investments, NVIDIA has built a sustainable competitive advantage. As long as AI adoption continues accelerating, NVIDIA's future looks bright.
NVIDIA's stock performance (NVDA)
NVIDIA's stock has experienced massive growth in recent years as the company has established itself as a leader in AI hardware and software. In the past 5 years alone, NVIDIA's stock price has increased over 2250% from around $33 in early 2019 to over $740 in early 2024.
For investors or traders excited about the future growth of AI across markets, NVIDIA represents a compelling AI pure-play. The company is poised to remain at the forefront as AI transforms industries and powers next-generation technologies.
Alphabet Inc.
Alphabet Inc. (GOOGL) was founded in 1998 and began as a search engine giant known as Google. Since then, Alphabet has expanded its reach and diversified its offerings, with a wide range of businesses including Google, YouTube, Waymo, and Verily.
Alphabet’s involvement in AI is obvious across its diverse portfolio of products and services. These include Google’s search algorithms, voice recognition technologies, and recommendation systems which all leverage AI to deliver personalized user experiences.
Furthermore, Alphabet’s investment in Waymo shows its commitment to AI-driven advancements in autonomous vehicle technology, which relies heavily on AI for navigation and decision-making.
Some of the most prominent Alphabet subsidiaries utilizing AI include:
- Waymo - Alphabet's self-driving technology company, Waymo, is a pioneer in autonomous vehicles and a heavy user of AI and machine learning. Waymo is testing and developing self-driving systems to eventually commercialize autonomous taxis and other vehicles.
- DeepMind - Acquired by Alphabet in 2014, DeepMind is one of the leading AI research labs in the world. They are focused on advancing deep learning and creating next-generation AI algorithms that can mimic human intelligence.
- Verily - Verily is Alphabet's life sciences subsidiary applying AI and data analytics to healthcare and research. They are developing tools for improving disease prevention, treatment, and patient care.
- Google - Google utilizes AI across nearly all of its products and services, including search, voice recognition, translations, image analysis, spam detection, and more. The company opensources many of its AI frameworks.
- YouTube - YouTube uses AI for various functions including video recommendations, automatically generated captions, and enhancing video quality/stability. The video platform is a rich source of data for developing AI systems.
Alphabet’s stock performance (GOOGL)
With a market capitalization of $1.76 trillion in 2024, Alphabet has undergone 3 stock splits since 2014. Stock splits can improve a company’s liquidity and they are generally done to make investing in the company more affordable. After a stock split, the price per share decreases, making it more accessible than it was before. One GOOGL share bought in early 2014 would be worth about 40 shares at today’s price.
Alphabet reported strong revenue growth in 2021, with total revenues of $257.63 billion - a 41% increase from the previous year. As of January 2020, Alphabet's stock price was trading around $1,450 per share with a market capitalization of nearly $1 trillion.
As of the 21st february 2024, the company’s price-to-earnings ratio is high, at nearly 30 times. It's a high multiple and price to pay for a stock but it reflects investors' confidence in the company's growth potential. The company has consistently and steadily gained value over the years, with its stock price increasing by about 200% between the lows of 2020 and the highs of 2021.
Microsoft Corporation
Microsoft Corporation (MSFT) started as a software company in 1975 with its Windows operating system and Office productivity suite. Today, Microsoft has established itself as a powerhouse offering a diverse range of products and services spanning cloud computing, gaming, productivity software, and enterprise solutions.
In recent years, Microsoft has embraced the era of AI, and strategically integrated AI technologies across its ecosystem. These include AI-driven personal assistants like Cortana, AI-drive productivity tools within Office 365, and advanced AI capabilities within Azure cloud services empowering developers and enterprises to build and deploy AI-driven solutions at scale.
Some of Microsoft's most notable AI initiatives include:
- Azure AI - Microsoft offers a comprehensive set of pre-built AI services like computer vision, speech recognition, machine learning, and natural language processing through Azure Cognitive Services. Azure Machine Learning provides a cloud-based environment for training, deploying, automating, and managing machine learning models at scale.
- Office 365 - Microsoft integrates AI features into popular productivity apps like Word, Excel, PowerPoint, and Outlook to enable smarter experiences. Examples include Ideas in Excel which auto-generates charts, Editor in Word which provides intelligent writing suggestions, and Presenter Coach in PowerPoint which offers live guidance on pace, inclusive language, and more.
- Dynamics 365 and Power Platform - Microsoft's business applications leverage AI to deliver actionable insights, predictions, and recommendations. The Power Platform enables anyone to build AI-powered apps, chatbots, and workflows with no-code tools.
- Bing - Microsoft uses AI to improve search relevance, provide intuitive answers, and generate new content on Bing.com. Bing leverages natural language processing and machine learning to understand user intent behind queries. Microsoft invested $10 billion in OpenAI, the founding company of chatGPT, changing the way the company competes with big tech companies.
- SwiftKey - Microsoft's mobile keyboard app for Android and iOS relies on AI to provide predictive typing and autocorrect. It learns from data to enhance suggestions over time.
- Healthcare Bot - Microsoft partnered with Apollo Hospitals to build an AI-powered bot for health tips, booking appointments, checking symptoms, and more. The bot uses natural language capabilities to understand conversations.
- Microsoft Research - Microsoft invests over $1 billion annually in its research labs working to advance AI capabilities in areas like computer vision, machine learning, natural language processing, and quantum computing.
Microsoft's stock performance (MSFT)
Microsoft's stock has performed very well in recent years as the company has expanded its presence in cloud computing and artificial intelligence. Microsoft's share price has risen over 400% in the last 5 years, significantly outperforming the broader stock market.
In terms of valuation, Microsoft has a market capitalization of $2.9 trillion as of the 21st February 2024, making it the most highly valued company in the world. The company's strong financial performance has allowed it to consistently increase its dividend payout to shareholders since 2005.
As of February 20, 2024, Microsoft's stock price stands at around $400 per share, making it the second most expensive stock on this list.
Conclusion
NVIDIA is the dominant force in AI hardware and chips. Its GPUs are essential for neural networks and deep learning applications. Alphabet generates strong revenue from online ads and searches, while steadily growing its AI initiatives such as Waymo's autonomous driving technology. Microsoft is a tech titan with a diverse business model and a solid track record. The company is making major investments in AI and development across its products and services.
The incredible pace of advancement within artificial intelligence promises many more opportunities in the years ahead. By staying informed, you can potentially position yourself to profit as this technology continues remaking the world. When evaluating stocks, be sure to analyse the charts, assess the company's financial health, growth strategy and market positioning in the AI sector.
AI stocks offer significant opportunity and potential for growth as the technology continues to expand and transform industries. Anyone interested in gaining exposure to AI, may want to look in to the stocks of Microsoft, NVIDIA, and Alphabet.
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