Best AI Software Stocks To Invest In 2024
Almost every industry is changing due to automation, robotics, and artificial intelligence. The world was given a firsthand look at the incredible advancements in AI technology made by Google, Microsoft, and OpenAI recently.
Businesses that do not invest in artificial intelligence (AI) products and services run the risk of becoming outdated. Examples of AI applications and services include machine learning, large language models, digital assistants, smart appliances, digital applications, and synthetic media software. While AI has enormous potential for businesses, only a small number of stocks have automation and AI at the core of their operations.
Hence investors see AI stock as the next big thing in the world business market: the invention that will open up new markets, spur economic expansion, and produce years with astounding returns on their investments.
What is AI stock?
AI stock refers to stocks of companies that are involved in the development, production, or implementation of artificial intelligence technologies. These companies typically focus on creating AI algorithms, machine learning models, or AI-powered products and services. Examples of AI stocks may include companies like Alphabet (Google), Microsoft, IBM, NVIDIA, and Amazon, among others. It’s important to note that investing in stocks carries risks, and it is advisable to conduct thorough research and consult with a financial advisor before making any investment decisions.
How to invest in AI stocks
Investing can take various forms, and artificial intelligence (AI) seems to be rapidly emerging as a significant disruptive technology.
By understanding these disruptive trends and investing in these new technologies, one can make large profits, although there is fierce competition emerging, making it difficult to predict which startups will succeed.
To invest in AI stock one needs to first open a brokerage account and if you are new to AI stock trading and want to invest in AI stocks.
You will then need to determine the level of exposure to AI stocks you desire. Although they come with a great deal of risk, upfront costs, and research effort, individual AI equities have the potential to yield large gains.
Generally speaking, some investors may prefer to invest directly in businesses developing AI, while others may decide to put their money into businesses that will stand to gain the most from the technology’s broader application.
By using the emergence and expansion of the personal computer sector as an example, investors could have made profitable investments in router and switch manufacturers or computer manufacturers.
Some others tried to find businesses that would profit most from the automation that computers provided, while yet others made investments in software firms that created computer programs.
10 Best AI Software Stocks To Buy & Invest In 2024
However, this article will lead you through the 10 Best AI Software Stocks To Buy In 2024
1. Alphabet Inc. (GOOGL)
The first on our list of 10 Best AI Software Stocks To Buy In 2024 is Alphabet Inc. (GOOGL).
The parent company of Google and YouTube; Alphabet makes use of AI and automation, in almost every aspect of its operations, including Gmail spam filters, ad pricing, and content promotion.
Alphabet has been at the forefront of AI research and development since March 2023, when Google introduced its Bard AI chatbot. The business included Bard in its entire toolkit, which includes YouTube, Google Drive, and Google Flights ensuring that AI is used in all its subsidiaries.
Later in the year, Google unveiled Gemini, referring to it as the most capable and general model that the business has ever produced placing Google at the leading position in the industry with cutting-edge fields including artificial intelligence, virtual and augmented reality, and quantum computing.
Hence, with Its various AI-driven products and services, including Google Cloud and Google Assistant, Alphabet has positioned itself as a leader in the AI space, making it one of the 10 Best AI Software Stocks To Buy In 2024.
The next on our list of 10 Best AI Software Stocks To Buy In 2024 is Microsoft Corporation (MSFT).
Microsoft has made significant investments in AI, with its Azure cloud platform offering various AI tools and services. The company’s AI initiatives span across areas such as machine learning, natural language processing, and computer vision.
Over time, Microsoft creates and maintains software for personal computers and the business is also a pioneer in cloud computing services, which make it possible to create and maintain enterprise applications.
Investors have historically done well with Microsoft. Over the past fifteen years, the stock has produced an annualized total return of 22.3%, which comprises both a tidy dividend yield of 0.75% and significant share price growth making it rank high on our list of 10 Best AI Software Stocks To Buy In 2024.
The next on our list of 10 Best AI Software Stocks To Buy In 2024 is NVIDIA Corporation (NVDA).
NVIDIA is a leading provider of graphics processing units (GPUs) that are widely used in AI applications. Its GPUs are highly regarded for their performance in training and running AI models, making NVIDIA a key player in the AI hardware market.
Nvidia is the biggest fabless chip designer in the world. Gaming consoles, traditional and autonomous cars, cloud service providers, and data centers all employ processors made by Nvidia.
Like MSFT, Nvidia has a solid track record with investors. Nvidia has generated average yearly returns of greater than 43% over the last fifteen years. Naturally, it hasn’t been an easy journey all through.
However, this year’s strength of the stock comes from the increasing use of NVDA processors in AI applications. 95% of the graphics processing units (GPUs) used in machine learning applications are supplied by Nvidia, making it an attractive point of investment to investors
The financial line is already benefiting from this market leadership. Thanks to robust sales of AI GPUs, NVDA reported a 279% quarter-over-quarter revenue gain in its data center division for the third quarter of its fiscal year 2024.
Taiwan Semiconductor (TSM) is next on our list of 10 Best AI Software Stocks To Buy In 2024. As the company produces the largest chip foundry in the world.
Taiwan Semiconductor produces semiconductors under contract for well-known tech firms including Nvidia and Microsoft.
Applications using AI and machine learning rely on more sophisticated CPUs. According to a 2021 McKinsey study, artificial intelligence (AI) helped semiconductor businesses generate between $5 billion and $8 billion in earnings before interest and taxes (EBIT) yearly. According to the same study, those figures would rise to $85 billion to $95 billion a year.
TSM is well-positioned to benefit from this expansion, holding more than half of the worldwide market for semiconductor foundries.
The next on our list of 10 Best AI Software Stocks To Buy In 2024 is Amazon.com, Inc. (AMZN). Amazon indeed represents many different things: it is the biggest online retailer in the world, a pioneer in cloud computing, and a significant supplier of online advertising, making it a great prospect to investors in terms of AI Software Stocks.
Amazon Web Services (AWS), a cloud computing platform, provides direct access to the AI revolution. Customers create, implement, and host enterprise apps, including AI apps, using cloud services.
It is also good to mention that almost every facet of Amazon’s operations, such as Amazon Web Services, marketplace search and recommendation algorithms, and targeted advertising, have AI embedded within them.
This does not exempt users of the AWS cloud, Amazon provides a plethora of AI and machine learning capabilities, including chatbots, automatic code reviews, and sophisticated text analytics. Recently, the capacity to express opinions was one of the generative AI features that Amazon added to its Alexa personal assistant, increasing its capacity to give more accurate solutions to issues.
Over the previous 15 years, Adobe is another well-known stock that has produced returns that have outpaced the market and it is still working on improving. This die-hard push on introducing new features makes it rank in the list of 10 Best AI Software Stocks To Buy In 2024.
The business is making significant investments to include generative AI capabilities in its product. While some of the other organizations on our list can provide businesses with AI capabilities, Adobe serves the entire spectrum of clients, from single individuals to large corporate marketing teams.
Generous AI features have already been released by Adobe in their Photoshop program. A program that uses text prompts to generate graphics and color palettes is also being beta-tested by the company. Analysts predict that these features will propel Adobe’s subscription income in the future.
The next on our list of 10 Best AI Software Stocks To Buy In 2024 is Baidu, Inc. Baidu is often referred to as the “Google of China” and has been heavily investing in AI research and development. The company’s AI initiatives cover areas such as autonomous driving, natural language processing, and healthcare.
Baidu also provides several services, such as Baidu Maps, a mapping tool, and a Chinese search engine. A cloud storage service called Baidu Wangpan, an online encyclopedia called Baidu Baike, and a discussion forum centered around keywords are just a few of the approximately 57 search and community services that Baidu provides, with this one can invest in Baidu and make great profits both on the short and long term investment.
The next on our list of 10 Best AI Software Stocks To Buy In 2024 is Meta Platform this is due to the high potential embedded in Meta Platform.
Facebook, Instagram, and Messenger are just a few of the social media apps that are developed and maintained by Meta Platforms, formerly known as Facebook.
Also in the company’s app suite is Whatsapp. Meta also produces and markets virtual reality gear and software. As an investor, you can decide to pick any of the platforms to invest in or you go for the parent company.
Super Micro Computer is the next on our list of 10 Best AI Software Stocks To Buy In 2024. Super Micro Computer manufactures high-performance servers that are utilized by cloud computing platforms, data centers, and artificial intelligence applications.
Hence by providing rapid delivery and system customisation, the company sets itself apart from other hardware suppliers.
Supermicro has established itself as a pioneer in AI hardware because of its rapid custom solution development. As more companies use AI technology, there will be a greater demand for powerful yet affordable hardware. Supermicro is well-positioned to benefit from that surge in demand.
The business has been reporting increasing revenue from AI infrastructure for the last several quarters.
10. Symbotic (SYM)
The flagship product from SYM is an end-to-end solution driven by AI that automates warehouse operations through the employment of robots. This makes Symbiotic rank in the list of 10 Best AI Software Stocks To Buy In 2024.
Retailers and wholesalers in the United States are the target market for Symbotic’s robotics and associated technology, however, it has a profitable AI software stock investment potential due to the level at which the product is being used by retailers and wholesalers
It is worth noting that large merchants with both physical and online outlets are Symbotic’s clientele and SYM solutions have been employed by Walmart and Target to improve workflow and cut labor expenses.
Hence, those retailers that are Big box retailers will require an increasing number of AI-powered distribution and warehousing solutions. Businesses that continue to use manual procedures will lose their competitive advantages. We will talk about symbiotics as the demand for automation rises.
The market for warehouse automation in the United States, Canada, and Europe is estimated by the company to be valued at $432 billion. Furthermore, Symbotic recently joined forces with GreenBox Systems to provide warehouse space on a service basis. This increases Symbiotics’s addressable market by an additional $500 billion.
What are the advantages of investing in AI software stocks?
Even if it is difficult to overlook the similarities between the dot-com bubble of the late 1990s and the present AI boom, many of the firms that were predicted to become leaders at that time did not exist even five years earlier.
But coming to speak of AI, Nvidia celebrated its 30th anniversary last year; Microsoft is over 50 years old; and Baidu, a Chinese company, was established at the turn of the century and some of them are still doing well in business. These companies are huge, well-known enterprises with significant cash flows and some of the strongest business strategies in the world.
It is an indication that investing in AI Software Stock will give a great profit both in the short term and long term.
Also, there is still more to be done in the area of artificial intelligence. This year’s discoveries raise the possibility that the world is on the cusp of a new computer paradigm similar to the internet, smartphones, and PCs.
Hence as an investor, whether you invest directly in AI development firms or in those that stand to gain the most from the technology’s broader adoption, you will profit from your investment in any area of the AI sector.
What are the hazards of investing in AI software stock?
AI investing might not be as simple as it first appears. It is important to take a step back, take a deep breath, and weigh the risks before making any kind of investment. Though the potential gains are substantial, investing with a theme is speculative.
Furthermore, investment in AI might not go as planned. Regulation-related worries are a danger. For instance, due to privacy concerns, Italy briefly blocked access to ChatGPT, and the European Union is drafting an AI Act to safeguard citizens’ rights.
These are just a few examples of AI software stocks that have gained attention in the market.
Given artificial intelligence’s revolutionary impact on numerous industries, investing in AI equities could result in substantial gains. Nonetheless, it’s critical to acknowledge this industry’s distinctive features.
Rapid technology advancements and strong growth expectations are characteristics of AI stocks, which can result in inflated valuations and higher volatility. Many AI firms prioritize long-term capital appreciation over short-term revenue creation, preferring to reinvest in technology and expand their markets rather than paying dividends, especially those that are still in the early stages of development.
The competitive environment, ethical issues surrounding AI technologies, and regulatory developments all have an impact on the AI industry. Each of these may have an impact on stock performance.
You should take these dynamics into account if you’re thinking about investing in AI or AI-related stocks. To reduce risk and manage the inherent volatility, this entails carrying out an in-depth study to comprehend the possibilities and hazards connected with AI investments, diversifying across several AI companies and subsectors, and keeping a long-term investing perspective. Making judgments based on a balance between these factors and conventional financial research will help you potentially take advantage of the growth opportunities that artificial intelligence (AI) offers.
It’s important to conduct thorough research, analyze financial reports, and consider market trends before making any investment decisions. Additionally, diversification and a long-term investment strategy are often recommended when investing in stocks.