Virtually every industry is being disrupted by artificial intelligence, automation and robotics.
In recent months, the world has gotten 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.
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Whether it be machine learning, smart applications and appliances, digital assistants, or autonomous vehicles, companies that aren’t investing in AI products and services risk becoming obsolete. Countless companies 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 June 12 close |
| Microsoft Corp. (ticker: MSFT) | 2.5% |
| Alphabet Inc. (GOOG, GOOGL) | 3.5% |
| Nvidia Corp. (NVDA) | 26.6% |
| Meta Platforms Inc. (META) | 10.7% |
| Taiwan Semiconductor Manufacturing Ltd. (TSM) | 7.4% |
| ASML Holding N.V. (ASML) | 17.1% |
| SAP SE (SAP) | 13.6% |
| RELX Plc (RELX) | 17.8% |
| Arista Networks Inc. (ANET) | 0% |
| Baidu Inc. (BIDU) | 74.2% |
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. Microsoft integrated ChatGPT into its Bing search engine in February, and thousands of customers are now running an AI-powered version of Teams just months after launch. Analyst Brad Sills says AI and machine learning opportunities, accelerating Azure growth and ramping Office 365 premium sales will drive Microsoft shares higher. Bank of America has a “buy” rating and $340 price target for MSFT stock, which closed at $331.85 on June 12.
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. Analyst Justin Post says the latest data from Statcounter suggest Google’s search engine market share now stands at 93.1% compared to just 2.8% for Bing. Post says Google will be a major long-term AI beneficiary thanks to its leading AI-based advertising technology, as well as its data and distribution advantages. Bank of America has a “buy” rating and $128 price target for GOOGL stock, which closed at $123.64 on June 12.
Nvidia Corp. (NVDA)
High-end chipmaker Nvidia provides the massive processing power needed to run advanced AI applications. Analyst Vivek Arya says Nvidia is a top technology stock pick given its runway for sustainable AI growth, its expanding global addressable market and its improving gaming outlook. In addition, company management believes Nvidia has opportunities to expand from AI accelerators into high-performance central processing unit (CPU) data processing. Arya says Nvidia has long-term earnings per share potential of greater than $20 if it can maintain 65% share of the accelerator market. Bank of America has a “buy” rating and $500 price target for NVDA stock, which closed at $394.82 on June 12.
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. Meta recently launched a new generative AI tool for advertisers called AI Sandbox. Meta plans to use AI Sandbox as a testing grounds for its initial versions of AI features ahead of a wider rollout in July. Meta has been aggressively investing in building its AI capabilities for several years, and Post says AI products could significantly improve the stock’s valuation. Bank of America has a “buy” rating and $300 price target for META stock, which closed at $271.05 on June 12.
[READ: Can You Invest in ChatGPT and OpenAI?]
Taiwan Semiconductor Manufacturing Ltd. (TSM)
Taiwan Semiconductor Manufacturing is the world’s largest pure-play semiconductor foundry. It manufactures all of the advanced AI semiconductors for Nvidia and other AI chipmakers. Analyst Brad Lin says chip-on-wafer-on-substrate (CoWoS) demand is now exceeding supply thanks to generative AI. TSM management also believes AI will eventually expand from cloud computing to edge devices. Lin says booming AI demand will serve as a tailwind for Taiwan Semiconductor sales. He anticipates the company’s business will recover from a cyclical trough in the second half of 2023. Bank of America has a “buy” rating and $115 price target for TSM stock, which closed at $107.06 on June 12.
ASML Holding N.V. (ASML)
ASML produces photolithography systems and other processing equipment used in semiconductor fabrication. As more AI applications are created, demand for chips manufactured using advanced process nodes will grow. Analyst Didier Scemama estimates generative AI could add $3 billion in annual wafer fabrication equipment spending. Scemama says generative AI will be a significant semicap growth driver and anticipates earnings multiple expansion ahead for ASML. He projects EPS growth of at least 22.9% annually through 2025 and says there may be upside to ASML’s 2025 financial targets. Bank of America has a “buy” rating and $855 price target for ASML stock, which closed at $730.17 on June 12.
SAP SE (SAP)
SAP is a global leader in enterprise resource planning (ERP) software solutions. The company offers a number of AI-driven business solutions to help companies optimize finance, supply chains, procurement, sales and marketing. Analyst Frederic Boulan says SAP is well-positioned to take advantage of AI solutions demand. SAP showcased its AI offerings at its recent Sapphire conference and announced a joint data analytics offering with AI leader Google. Boulan says SAP’s pivot to a cloud-based business model will drive revenue growth acceleration and margin expansion. Bank of America has a “buy” rating and $152 price target for SAP stock, which closed at $133.77 on June 12.
RELX Plc (RELX)
RELX provides information and analytics for professional and business customers around the world. RELX is increasingly incorporating AI and machine learning across its legal, risk and science divisions. Those efforts include a recent $36 million acquisition of Aistemos, a company that uses AI to classify patents. Analyst David Amira says AI is a “game changer” for RELX’s legal division, and the company’s new generative AI research platform will bolster its legal analytics business. Amira says RELX has a valuable brand as a trusted legal research platform. Bank of America has a “buy” rating and $37.80 price target for RELX stock, which closed at $32.08 on June 12.
Arista Networks Inc. (ANET)
Arista Networks supplies cloud networking solutions to internet companies, cloud service providers and enterprise data centers. Arista’s high-performance cloud networking solutions and high-throughput data center switches are necessary to provide the processing power required for intensive AI workloads. Analyst Tal Liani says AI is currently a small contributor to Arista’s revenue growth, but that contribution will grow over time as AI infrastructure buildout continues. Liani says Arista has solid profitability, and gross margins will likely improve throughout 2023 as component costs decline. Bank of America has a “buy” rating and $170 price target for ANET stock, which closed at $170 on June 12.
Baidu Inc. (BIDU)
Baidu is the leading Chinese internet search provider. The company also has several other businesses, including its AI and cloud businesses and its majority stake in streaming video platform iQIYI Inc. (IQ). In March, Baidu unveiled ERNIE Bot, its large language model generative AI product and response to ChatGPT. Analyst Miranda Zhuang says Baidu is offering advertisers AI-generated content solutions and AI customer services targeting higher sales conversion rates. It’s also testing a standalone ERNIE Bot app and integrating the AI software into Baidu Search. Bank of America has a “buy” rating and $234 price target for BIDU stock, which closed at $134.36 on June 12.
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Artificial Intelligence Stocks: The 10 Best AI Companies originally appeared on usnews.com
