Artificial intelligence (AI) is one of the most powerful and disruptive technologies of our time. It has the potential to transform every industry, from healthcare to entertainment, and create new opportunities for businesses and consumers alike. According to a report by Grand View Research, the global AI market size is expected to reach $733.7 billion by 2027, growing at a compound annual growth rate of 42.2%.
With such a huge market opportunity, it is no wonder that many investors are looking for the best AI stocks to buy and hold for the long term. However, not all AI stocks are created equal. Some have more competitive advantages, growth prospects, and innovation potential than others. In this article, we will review the top 5 AI stocks that stand out from the crowd and offer attractive returns for 2024 and beyond.
- NVIDIA (NASDAQ: NVDA)
NVIDIA is the undisputed leader in the graphics processing unit (GPU) market, which is the core hardware component for running advanced AI applications. NVIDIA’s GPUs are used by data centers, cloud service providers, researchers, and developers to power AI workloads such as deep learning, computer vision, natural language processing, and self-driving cars. NVIDIA also offers software platforms and tools that make it easier for customers to build, deploy, and scale AI solutions.
NVIDIA has been one of the best-performing stocks of 2023, surging more than 220% year to date and reaching a market capitalization of over $1.1 trillion. The company has benefited from the strong demand for its products and services amid the AI boom, as well as its strategic acquisitions and partnerships. For instance, NVIDIA acquired Arm, the leading designer of chips for smartphones and IoT devices, for $40 billion in 2020, which will give it access to a larger and more diversified customer base. NVIDIA also partnered with Google (NASDAQ: GOOGL) to integrate its GPUs into Google Cloud, expanding its reach in the cloud computing market.
NVIDIA is not resting on its laurels, however. The company continues to invest heavily in research and development, launching new and improved products and technologies that push the boundaries of AI. For example, NVIDIA recently unveiled Grace, its first data center CPU that is optimized for AI and high-performance computing. NVIDIA also introduced Omniverse, a platform that enables real-time collaboration and simulation across different applications and devices. With its relentless innovation and dominant position in the AI market, NVIDIA is well-positioned to maintain its growth momentum and deliver stellar returns for investors in 2024 and beyond.
- Microsoft (NASDAQ: MSFT)
Microsoft is another tech giant that is at the forefront of the AI revolution. The company’s Azure cloud platform is one of the leading providers of AI services and tools, offering customers a comprehensive suite of solutions for building, running, and managing AI applications. Azure’s AI offerings include machine learning, cognitive services, conversational AI, computer vision, and more. Azure also supports OpenAI, one of the most influential AI research organizations in the world, and hosts its powerful GPT-3 language model.
Microsoft’s AI capabilities are not limited to Azure, however. The company also leverages AI to enhance its own products and services, such as Windows, Office, Bing, Xbox, and LinkedIn. Microsoft uses AI to improve the functionality, performance, and user experience of these products, as well as to generate new revenue streams and business opportunities. For instance, Microsoft uses AI to power its Dynamics 365 suite of business applications, which help customers optimize their sales, marketing, customer service, and operations. Microsoft also uses AI to create new products and services, such as Microsoft Healthcare Bot, which enables healthcare organizations to create virtual assistants for patients and providers.
Microsoft has been one of the most consistent and reliable performers in the stock market, delivering solid growth and returns for shareholders year after year. The company has a market capitalization of over $2.7 trillion, making it one of the most valuable companies in the world. Microsoft has also been growing its dividend and share buyback program, rewarding investors with generous cash returns. With its strong AI portfolio, diversified revenue streams, and loyal customer base, Microsoft is a safe and stable bet for AI investors in 2024 and beyond.
- Alphabet (NASDAQ: GOOGL)
Alphabet is the parent company of Google, the world’s most popular search engine and online advertising platform. Google is also one of the pioneers and leaders in AI, having developed some of the most advanced and widely used AI technologies and applications in the world. Google’s AI expertise spans across various domains, such as search, advertising, cloud, YouTube, Gmail, Maps, Photos, Assistant, and more. Google also owns Waymo, the leader in autonomous driving technology, and DeepMind, the leader in artificial general intelligence research.
Alphabet’s AI prowess is not only a source of competitive advantage, but also a driver of revenue growth and profitability. The company generates most of its revenue from online advertising, which relies heavily on AI to deliver relevant and personalized ads to users and optimize the return on investment for advertisers. The company also generates revenue from its cloud business, which offers AI services and tools to customers across various industries and sectors. Additionally, the company invests in AI-related ventures and initiatives, such as Google AI Impact Challenge, Google AI for Social Good, and Google.org, which aim to use AI to solve some of the world’s biggest challenges and create positive social impact.
Alphabet has been one of the best-performing stocks of 2023, soaring more than 60% year to date and reaching a market capitalization of over $2.1 trillion. The company has benefited from the recovery of the online advertising market, as well as the growth of its cloud and other businesses, amid the COVID-19 pandemic. The company has also been increasing its shareholder value, announcing a $50 billion share buyback program in April 2021. With its unparalleled AI capabilities, diversified revenue sources, and strong financial performance, Alphabet is a top AI stock to buy and hold for 2024 and beyond.
- C3.ai (NYSE: AI)
C3.ai is a leading provider of enterprise AI software, which enables customers to build, deploy, and operate AI applications at scale. The company’s software platform, C3 AI Suite, is a comprehensive and integrated solution that simplifies the development, execution, and management of AI applications. The company also offers pre-built AI applications, such as C3 AI CRM, C3 AI Ex Machina, C3 AI Energy Management, and C3 AI Predictive Maintenance, which address specific use cases and business problems for various industries and functions.
C3.ai is a relatively young and small company, having been founded in 2009 and gone public in 2020. The company has a market capitalization of about $5.5 billion, making it a fraction of the size of the other AI stocks on this list. However, the company has been growing rapidly, thanks to the increasing demand for its products and services from customers across various sectors, such as energy, manufacturing, healthcare, financial services, and defense. The company has also been expanding its partnerships and collaborations with other tech giants, such as Microsoft, Google, IBM, and Baker Hughes, to broaden its reach and capabilities.
C3.ai is not without risks, however. The company faces intense competition from other AI software providers, both large and small, as well as the risk of losing customers or failing to acquire new ones. The company is also not profitable yet, and may need to raise more capital to fund its growth and innovation. Nonetheless, C3.ai has a lot of potential to become a leader and disruptor in the enterprise AI market, which is expected to grow at a compound annual growth rate of 25.4% from 2020 to 2027, according to Research and Markets. For investors who are willing to take on more risk and volatility, C3.ai could be a rewarding AI stock to buy for 2024 and beyond.
- Amazon (NASDAQ: AMZN)
Amazon is the world’s largest online retailer and e-commerce platform, as well as the leader in cloud computing and smart speaker markets. The company is also a major player in AI, using the technology to power and improve its core businesses, as well as to create new products and services. Amazon’s AI capabilities include machine learning, computer vision, natural language processing, speech recognition, and more.
Amazon uses AI to enhance its online shopping experience, such as by providing personalized recommendations, dynamic pricing, fraud detection, and fast delivery. The company also uses AI to optimize its operations, such as by automating its warehouses, managing its inventory, and forecasting demand. Additionally, the company uses AI to innovate and diversify its offerings, such as by launching Alexa, its voice-activated virtual assistant, Amazon Web Services (AWS), its cloud computing platform that offers AI services and tools, and Amazon Go, its cashierless convenience store.
Amazon has been one of the most successful and dominant companies in the world, with a market capitalization of over $1.7 trillion and a revenue of over $386 billion in 2020. The company has also been growing its earnings and cash flow, as well as investing in new and emerging markets, such as healthcare, gaming, and streaming. The company has also been rewarding its shareholders, announcing a $5 billion share buyback program in February 2021. With its unparalleled AI expertise, diversified revenue streams, and strong growth prospects, Amazon is a must-have AI stock for 2024 and beyond.
