Virtually every industry is being disrupted by artificial intelligence, automation and robotics. In recent months, the world got a firsthand look at the remarkable advances in AI technology, including expanded public access to OpenAI’s DALL-E 2 AI image and art generator and the public launches of OpenAI’s ChatGPT AI chatbot and Google’s Bard AI chatbot.
[Sign up for stock news with our Invested newsletter.]
Whether it be machine learning, smart applications and appliances, digital assistants, or autonomous vehicles, many companies that don’t invest in AI products and services risk becoming obsolete. Countless firms stand to benefit from AI, but a handful of stocks have AI and automation as a central part of their businesses.
Here are 10 of the best AI stocks to buy, according to Bank of America:
| Stock | Implied upside over April 10 closing price |
| Microsoft Corp. (ticker: MSFT) | 3.7% |
| Alphabet Inc. (GOOG, GOOGL) | 17.4% |
| Nvidia Corp. (NVDA) | 12.4% |
| Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) | 29.2% |
| Meta Platforms Inc. (META) | 7.1% |
| ASML Holding NV (ASML) | 25.7% |
| SAP SE (SAP) | 2.8% |
| Relx PLC (RELX) | 8.2% |
| Baidu Inc. (BIDU) | 68.3% |
| Arista Networks Inc. (ANET) | 4.2% |
Microsoft Corp. (MSFT)
Software giant Microsoft invested $1 billion in OpenAI in 2019 as part of a partnership that made Microsoft Azure OpenAI’s exclusive cloud provider, and it announced a new multiyear, multibillion-dollar investment in OpenAI in January 2023. Bank of America analyst Brad Sills says Microsoft is seeking to reinvent its Bing search engine by integrating both the OpenAI model and its own proprietary Prometheus model. Analyst Justin Post says Microsoft Bing is unlikely to take meaningful search share from Google, but Microsoft is leading the charge in AI-enabled enterprise use cases. Bank of America has a “buy” rating and $300 price target for MSFT stock, which closed at $289.39 on April 10.
Google and YouTube parent company Alphabet uses AI and automation in virtually every facet of its business, from ad pricing to content promotion to Gmail spam filters. Google launched its Bard AI chatbot in March, and the company has been investing heavily in AI technology for several years now. Google has superior data resources, and its DeepMind Technologies subsidiary is devoted exclusively to AI technology. Post says ChatGPT currently has a public relations advantage over Bard, but Google is “closing the performance and perception gap.” Bank of America has a “buy” rating and $125 price target for GOOGL stock, which closed at $106.44 on April 10.
Nvidia Corp. (NVDA)
High-end chipmaker Nvidia provides the massive processing power needed to run advanced AI applications. Analyst Vivek Arya says Nvidia dominates the nascent AI and large language model, or LLM, chip market, which will continue to expand rapidly for years to come. Arya says Nvidia’s full-stack AI offerings — including hardware, software and services — could help accelerate enterprise adoption of LLMs in virtually every conceivable end market. In addition, Nvidia’s DGX cloud platform supports AI supercomputing, and its Grace Hopper products are ideal for processing massive AI datasets. Bank of America has a “buy” rating and $310 price target for NVDA stock, which closed at $275.79 on April 10.
Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)
TSM is the world’s largest pure-play semiconductor foundry. Analyst Brad Lin says LLMs and generative AI, including ChatGPT, have created a huge growth opportunity for TSM. Lin says running and training AI models requires substantial computational capabilities, and TSM is still in the early stages of its AI opportunities. Lin says advanced mobile devices, AI and the Internet of Things, or IoT, will continue to fuel aggregate computing power growth and demand for increasingly complex semiconductor manufacturing. He projects at least 15% annual revenue growth for TSM through 2025. Bank of America has a “buy” rating and $115 price target for TSM stock, which closed at $89.02 on April 10.
Meta Platforms Inc. (META)
Meta Platforms is a market leader in social media and online advertising and is the owner of Facebook, Instagram and other platforms. Post says Meta has ramped up AI and machine learning technology investments to improve advertising model training and generate relevant suggested content for social media users. Meta is also building its own AI supercomputer. In April, the company published a new AI model that can identify individual objects within an image, even if it has not encountered the objects in its training. Bank of America has a “buy” rating and $230 price target for META stock, which closed at $214.75 on April 10.
[ 7 Best Semiconductor ETFs to Buy in 2023]
ASML Holding NV (ASML)
ASML produces photolithography systems and other processing equipment used in semiconductor fabrication. Analyst Didier Scemama says lithography tools are a critical part of AI chip production, and ASML’s extreme ultraviolet lithography tools are necessary to produce the types of advanced processors required to train AI and machine learning applications. In addition, AI databases are generally stored on chips produced using ASML’s tools. Scemama estimates that between 5% and 10% of ASML’s revenues are directly or indirectly exposed to chips used to run and train AI applications. Bank of America has a “buy” rating and $837 price target for ASML stock, which closed at $666.04 on April 10.
SAP SE (SAP)
SAP is a global leader in enterprise resource planning software solutions. Analyst Frederic Boulan says enterprises will continue to integrate AI into a growing number of software solutions. AI also helps SAP leverage its internal accounting, finance, human resources, supply chain and industrial process data and deliver valuable insights to its customers. Finally, Boulan says SAP’s recent sale of its Qualtrics stake for $7.6 billion will improve its earnings and free cash flow profile and unlock value for investors. Bank of America has a “buy” rating and $131 price target for SAP stock, which closed at $127.45 on April 10.
Relx PLC (RELX)
Relx provides information and analytics for professional and business customers around the world. Analyst David Amira projects AI and other advanced technologies will help the company generate consistent compound annual earnings growth of between 9% and 10%, triggering earnings multiple expansion for the stock. Amira says AI has helped Relx increase its revenue growth from around 4% annually prior to the COVID-19 pandemic to around 6% in fiscal 2023. AI has also made the company’s offerings more sophisticated, valuable and appealing to customers. Bank of America has a “buy” rating and $35.50 price target for RELX stock, which closed at $32.80 on April 10.
Baidu Inc. (BIDU)
Baidu is the leading Chinese internet search provider. The company also has several other businesses, such as its majority stake in streaming video platform iQiyi Inc. (IQ) and its AI and cloud businesses. In late March, Baidu officially launched Wenxin Qianfan, its enterprise LLM service platform. Analyst Miranda Zhuang says she is encouraged by Baidu’s progress on the AI front and expects more advancements on its current features as the model trains itself. Zhuang says Baidu is an industry leader in generative AI technology. Bank of America has a “buy” rating and $234 price target for BIDU stock, which closed at $139 on April 10.
Arista Networks Inc. (ANET)
Arista Networks supplies cloud networking solutions to internet companies, cloud service providers and enterprise data centers. Analyst Tal Liani says Arista is a market leader in high-throughput data center switches needed to interconnect the processing power required for intensive AI workloads. Liani says AI workloads are notoriously bandwidth-intensive and require hundreds of connected processors and gigabits of throughput. GPUs used for AI training can execute billions of operations in parallel. The more powerful AI models become, the more sophisticated the networks they run on will be. Bank of America has a “buy” rating and $170 price target for ANET stock, which closed at $163.13 on April 10.
More from U.S. News
7 Best Cheap Dividend Stocks to Buy Under $10
9 Upgraded Stocks to Buy in April
2023’s 10 Best-Performing Stocks
Artificial Intelligence Stocks: The 10 Best AI Companies originally appeared on usnews.com
Update 04/11/23: This story was published at an earlier date and has been updated with new information.
