Virtually every industry is being disrupted by artificial intelligence, automation and robotics in some way. The world got a firsthand look at remarkable advances in AI technology recently, including OpenAI’s ChatGPT AI chatbot, Google’s Bard AI chatbot and Microsoft’s Copilot AI assistant.
Whether it be machine learning, large language models, smart applications and appliances, digital assistants, synthetic media software, 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.
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Here are 10 of the best AI stocks to buy, according to Bank of America:
| Stock | Implied upside from Oct. 3 closing price |
| Microsoft Corp. (ticker: MSFT) | 29.2% |
| Alphabet Inc. (GOOG, GOOGL) | 10.2% |
| Nvidia Corp. (NVDA) | 49.4% |
| Meta Platforms Inc. (META) | 24.6% |
| Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) | 46.4% |
| ASML Holding NV (ASML) | 42% |
| SAP SE (SAP) | 21.9% |
| RELX PLC (RELX) | 16.5% |
| Arista Networks Inc. (ANET) | 21.7% |
| Baidu Inc. (BIDU) | 71.9% |
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. In September, Microsoft announced that it is integrating its AI assistants into a single AI experience called Microsoft Copilot. Analyst Brad Sills says heavy investments in AI technology will drive “meaningful” upside for Microsoft’s revenue and operating income over time. Bank of America has a “buy” rating and $405 price target for MSFT stock, which closed at $313.39 on Oct. 3.
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. Google is also reportedly testing Genesis, a tool that uses AI software to write news stories. In September, Google integrated Bard into its full suite of tools, including YouTube, Google Drive and Google Flights. Analyst Justin Post says Google Cloud has impressive generative AI capabilities, and customer AI appetite is strong. Bank of America has a “buy” rating and $146 price target for GOOGL stock, which closed at $132.43 on Oct. 3.
Nvidia Corp. (NVDA)
High-end chipmaker Nvidia provides the massive processing power needed to run advanced AI applications. Nvidia has been the best-performing stock in the entire S&P 500 in 2023, and it’s largely due to the company’s AI exposure. The stock got another boost in August when Nvidia announced a new partnership with Google to advance AI computing, software and services for Google Cloud customers worldwide. Analyst Vivek Arya says Nvidia’s dominance in AI training technology will support the company’s path to $30 in annual earnings per share. Bank of America has a “buy” rating and $650 price target for NVDA stock, which closed at $435.17 on Oct. 3.
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 generative AI tool for advertisers called AI Sandbox and is reportedly developing a new AI system built to be as powerful as the most advanced OpenAI model. Post says Meta’s focus on integrating AI technology across surfaces and recent management commentary on AI agents suggests announcements of new Meta AI and machine learning products could be just around the corner. Bank of America has a “buy” rating and $375 price target for META stock, which closed at $300.94 on Oct. 3.
Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)
Taiwan Semiconductor Manufacturing is the world’s largest pure-play semiconductor foundry. TSM manufactures all of the advanced AI semiconductors for Nvidia and other AI chipmakers. In July, TSM said demand for AI chips is outpacing the company’s ability to supply them and announced it is investing $2.9 billion in an advanced packaging facility in Taiwan to produce high-performance chips. Analyst Brad Lin says Taiwan Semi’s valuation is attractive relative to historical levels and predicts the stock will re-rate higher as the AI theme plays out. Bank of America has a “buy” rating and $125 price target for TSM stock, which closed at $85.41 on Oct. 3.
[READ: 6 of the Best AI ETFs to Buy Now]
ASML Holding NV (ASML)
ASML produces photolithography systems and other processing equipment used in semiconductor fabrication. ASML is the only major producer of the extreme ultraviolet lithography equipment necessary to produce advanced AI chips. Analyst Didier Scemama says ASML’s significant underperformance relative to semiconductor peers in 2023 represents a buying opportunity given sluggish recoveries in the smartphone and PC markets and a deeper-than-expected memory market downturn. However, Scemama says the company’s long-term growth trends will drive 21% compound annual earnings before interest, taxes, depreciation and amortization growth through 2025. Bank of America has a “buy” rating and $810 price target for ASML stock, which closed at $570.60 on Oct. 3.
SAP SE (SAP)
SAP is a global leader in enterprise resource planning software. The company offers several AI-driven business solutions to help companies optimize finance, supply chains, procurement, sales and marketing. In June, SAP announced plans to hire approximately 200 AI engineers to help make its SAP Labs Singapore an AI technology hub. Analyst Frederic Boulan says SAP has reported ongoing cloud momentum, which will help improve the company’s revenue and earnings dynamics. He says generative AI monetization should provide medium-term upside. Bank of America has a “buy” rating and $156 price target for SAP stock, which closed at $127.94 on Oct. 3.
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 AI patent classification company Aistemos. In May, RELX launched its Lexis+ AI platform, which features conversational search, insightful summarization and intelligent legal drafting capabilities. Analyst David Amira says growth in RELX’s legal division could accelerate in the medium term as the company rolls out new generative AI-enabled products. Bank of America has a “buy” rating and $38.80 price target for RELX stock, which closed at $33.31 on Oct. 3.
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 provide the processing power required for intensive AI workloads. In the second quarter, Arista launched a cloud-based, AI-driven network identity service for information technology operations and enterprise security. Analyst Tal Liani says AI will be a long-term growth driver for Arista, and he is confident the company can capitalize on demand for AI-related bandwidth. Bank of America has a “buy” rating and $225 price target for ANET stock, which closed at $184.89 on Oct. 3.
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 August, Baidu publicly launched Ernie Bot, its large language model generative AI product and response to ChatGPT. The company also announced 10 additional AI-based applications just days later. Analyst Miranda Zhuang says Ernie Bot has gained impressive initial traction in China, and she is bullish on Baidu’s AI upside. Bank of America has a “buy” rating and $222 price target for BIDU stock, which closed at $129.17 on Oct. 3.
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Artificial Intelligence Stocks: The 10 Best AI Companies originally appeared on usnews.com
Update 10/04/23: This story was previously published at an earlier date and has been updated with new information.
