Top 5 Artificial Intelligence Stocks for 2023
Artificial intelligence (AI) has grown incredibly thanks to groundbreaking apps like ChatGPT. These nifty AI-powered applications have transformed tasks like report writing and data analysis, capturing the attention of investors and driving significant growth in artificial intelligence stocks.
The AI industry is booming, with AI-related exchange-traded funds (ETFs) surpassing the S&P 500 by a wide margin this year. For example, while the SPDR S&P 500 Trust (SPY) saw an 18% increase by mid-year, the First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT) soared with an impressive 24% gain. Investors are flocking to explore the promising opportunities this dynamic market presents.
This is the Next Level Academy, and we compiled the top five AI stocks for 2023. On top of that, we are also on a mission to eradicate poverty from this world completely. If you like what we do, join our community.
5 Best Artificial Intelligence Stocks to Invest in 2023
When assessing artificial intelligence stocks, considering various metrics is crucial. While a stock's performance is a key indicator, it's equally important to delve into the company's recent track record and future projections. Strong buying interest signals enthusiasm for a specific company or product but evaluating factors like historical performance and growth prospects helps paint a clearer picture.
1. Nvidia Corporation (NVDA)
Nvidia, a renowned graphics card manufacturer, has ventured into microchips for autonomous driving cars and AI applications. It is highly recognized for contributing to the gaming industry, artificial intelligence, and high-performance computing.
The company is worth considering for stocks as they’re deeply involved in two areas. First, they're working on self-driving cars, providing the brainpower needed for these vehicles to see, think, and drive safely. This technology is essential for making self-driving cars a reality.
Second, Nvidia also does exciting things in professional visualization, like creating virtual environments. This has a lot of potential in AI.
While there could be new technology down the road, Nvidia is in a strong position to benefit from the growth of AI, making it a promising option for investors interested in artificial intelligence stocks.
With a "B" financial health rating from Morningstar, Nvidia is expected to achieve more than 30% growth in EPS next year. Although its current forward price-earnings ratio is relatively high, it appears more reasonable considering Nvidia's substantial growth.
2. C3.ai, Inc. (AI)
C3.ai is a software company that specializes in enterprise AI applications. It was founded in 2009 by Thomas M. Siebel, the company's CEO. C3.ai provides a suite of AI-driven software solutions designed to help businesses harness the power of artificial intelligence for a wide range of applications, including predictive analytics, IoT (Internet of Things) data management, and AI-driven decision support.
Although this AI stock has only been trading since 2020 and lacks an extensive track record, it has experienced a remarkable rally over the past year. With high expectations for growth, analysts anticipate significant average yearly EPS growth in the coming years.
3. KLA Corporation (KLAC)
KLA Corporation (KLAC) has strong potential for its stock to grow because of several key reasons. Even though the semiconductor industry can go up and down in cycles, long-term trends like the increasing demand for electronic gadgets, 5G technology, and artificial intelligence (AI) can boost KLA's growth prospects. Second, they do business worldwide, and lastly, they've been smart about buying other companies, which can help them grow even more by adding new products and customers. Remember that investing in stocks always has risks, so it's essential to do your homework or talk to a financial advisor before investing.
In 2023, the stock has been going up a lot, and it's currently at a high price compared to its history. The company's profits and sales have been increasing steadily for the past few years, but this growth might not be as fast in the next five years.
4. Cadence Design Systems, Inc. (CDNS)
Cadence Design Systems, Inc. (CDNS) is an American electronic design automation (EDA) software and engineering services company. They specialize in providing software, hardware, and intellectual property (IP) for designing integrated circuits (ICs), printed circuit boards (PCBs), and electronic systems. Cadence's software tools are widely used in the semiconductor industry for designing and verifying complex electronic systems. The company is crucial in helping semiconductor manufacturers and electronics companies create cutting-edge products efficiently. Cadence is headquartered in San Jose, California, and is a prominent player in the global EDA industry.
Cadence Design Systems boasts an "A" financial rating from Morningstar and has seen notable earnings growth. Analysts project strong yearly growth over the next five years, with a 15.7% EPS growth expected next year.
While the current price-earnings (P/E) ratio is relatively high, the earnings growth makes the forward P/E appear more reasonable for a high-growth stock.
5. Palo Alto Networks, Inc. (PANW)
Palo Alto Networks' services have become necessary in today's digital landscape. As cyber threats evolve and become sophisticated, businesses and organizations rely on Palo Alto's comprehensive security solutions to protect their networks and data. With the shift towards cloud-based operations and the integration of AI and machine learning, Palo Alto Networks is not just a security provider but a crucial partner in safeguarding against the constant barrage of cyber threats. In an increasingly interconnected world, their services have become an indispensable shield for businesses and individuals alike.
In 2023, the stock has demonstrated excellent performance, sharply rising and trading at an all-time high. With Morningstar's "B" financial health rating, Palo Alto Networks exhibits a solid standing.
Valuing growth stocks like Palo Alto can be challenging, and this case is no different. Nonetheless, PANW can be one of the artificial intelligence stocks to watch out for.
What are AI Stocks?
AI stocks refer to shares in companies at the forefront of artificial intelligence development and utilization. These companies either make AI software and gadgets or use AI to improve their products. If you invest in these stocks, you can be part of the exciting AI world, but it's important to check if each company is a good bet and if it comes with any risks before you decide to invest your money.
How to Invest in AI Stocks?
Investing in AI stocks is just like investing in any other type of business. You must do your homework first to understand what's happening in the AI world and which companies are doing well.
Once you know enough, you can pick the stocks that you think will do the best over a long time. Finally, you can buy these AI stocks through a stockbroker when you're ready to invest your money.
Is Investing in AI Stocks Worth It?
Investing in AI stocks provides exposure to the rapid advancements and innovative developments within the AI industry. With a range of companies operating in different areas of AI, investors can diversify their portfolios and capitalize on the growth potential of this transformative technology sector. However, as with any investment, conducting thorough research and assessing the risks associated with investing in individual AI stocks is essential.
Never forget to do your due diligence before investing. Thoroughly read about stocks and attend an online investing class to grasp better what you need to look out for. Get a checklist on what to review before diving in.
Important: We are an education company and are, therefore, NOT regulated or licensed by MAS, as we do not provide investment services. Any form of investing carries risk and may not be suitable for everyone. You are recommended to seek advice from a professional financial advisor if you have any doubts.