Artificial intelligence, automation and robotics are changing nearly every industry. In the past year, the world got a firsthand look at remarkable advances in AI technology from OpenAI, Microsoft and Google.
[Sign up for stock news with our Invested newsletter.]
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. Here are 10 of the best AI stocks to buy, according to Argus Research:
| Stock | Implied upside over Feb. 5 close |
| Microsoft Corp. (ticker: MSFT) | 17.1% |
| Alphabet Inc. (GOOG, GOOGL) | 18.3% |
| Amazon.com Inc. (AMZN) | 8.6% |
| Nvidia Corp. (NVDA) | -13.5% |
| Meta Platforms Inc. (META) | 19.7% |
| Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) | 9.4% |
| Adobe Inc. (ADBE) | 7.1% |
| ASML Holding NV (ASML) | 11.3% |
| International Business Machines Corp. (IBM) | 22.7% |
| Arista Networks Inc. (ANET) | 0.7% |
Microsoft Corp. (MSFT)
After announcing a $1 billion investment in ChatGPT maker OpenAI in 2019, Microsoft increased its investment to $13 billion in January 2023 and integrated ChatGPT into its Bing search engine shortly thereafter. In September 2023, Microsoft announced it is integrating its AI products into a single AI experience called Microsoft Copilot. OpenAI has reportedly recently made impressive breakthroughs with its new AI model called Q* (pronounced “Q star”). Analyst Joseph Bonner says Microsoft’s dividend is safe and its ongoing investments in cloud services and AI position the company for long-term growth. Argus has a “buy” rating and $475 price target for MSFT stock, which closed at $405.65 on Feb. 5.
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 2023. In September, Google integrated Bard into its full suite of tools, including YouTube, Google Drive and Google Flights. In December, Google announced Gemini, its most capable AI model that incorporates different types of media. Bonner says Gemini is highly flexible, and Google believes it is the most powerful AI system in the world today. Argus has a “buy” rating and $170 price target for GOOGL stock, which closed at $143.68 on Feb. 5.
Amazon.com Inc. (AMZN)
Amazon has integrated AI into every aspect of its business, including targeted advertisements, marketplace search and recommendation algorithms, and Amazon Web Services. The company offers a wide range of AI and machine learning services to its cloud customers, including advanced text analytics, automated code reviews and chatbots. In September, Amazon integrated generative AI capabilities into its Alexa personal assistant that allows it to express opinions. Analyst Jim Kelleher says the integration of AI technology may be a shot in the arm for Amazon’s slowing AWS growth. Argus has a “buy” rating and $185 price target for AMZN stock, which closed at $170.31 on Feb. 5.
Nvidia Corp. (NVDA)
High-end chipmaker Nvidia provides the massive processing power needed to run advanced AI applications. Nvidia was the best-performing stock in the entire S&P 500 in 2023, largely due to the company’s AI exposure. AI-related demand for Nvidia’s graphics processing units helped the company triple its year-over-year revenue in the most recent quarter despite new U.S. export restrictions on high-end chips. Kelleher says Nvidia’s red-hot stock has an unparalleled positioning in the AI and deep-learning technology markets. Argus has a “buy” rating and $600 price target for NVDA stock, which closed at $693.32 on Feb. 5. That price target was released after third-quarter earnings, and investors can expect updated research after Nvidia’s fourth-quarter report expected on Feb. 21.
[READ: 15 Best Dividend Stocks to Buy for 2024]
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 is reportedly developing a new AI system built to be as powerful as the most advanced OpenAI model. The company is also reportedly testing more than 20 generative AI features across its platforms, including updates to search, advertising and business messaging. Bonner says Meta will continue to integrate AI features on all platforms that will help the company improve efficiency and further monetize its users. Argus has a “buy” rating and $550 price target for META stock, which closed at $459.41 on Feb. 5.
Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)
Taiwan Semiconductor Manufacturing is the world’s largest pure-play semiconductor foundry. Taiwan Semi manufactures all the advanced AI semiconductors for Nvidia and other AI chipmakers. Taiwan Semi recently said demand for high-end AI chips will help fuel 20% revenue growth for the company in 2024, despite weakness in smartphone and electric vehicle demand. Kelleher says Taiwan Semi is the leading merchant fabrication investment. Enterprise generative AI demand is surging and Kelleher says U.S. restrictions on technology sales to China will have only a minor impact on overall demand. Argus has a “buy” rating and $130 price target for TSM stock, which closed at $118.79 on Feb. 5.
Adobe Inc. (ADBE)
Adobe produces creative content software and other applications used for marketing and e-commerce. The company’s Firefly generative machine learning model is generating customer interest across Photoshop, Illustrator and other platforms. Adobe has also applied its Sensei AI and machine learning technology to its Adobe Analytics, Campaign and Target products. At the CES 2024 conference in January, Alexandru Costin, the company’s vice president of generative AI, told TechRadar that Adobe is transitioning from a software company to an AI company. Bonner says generative AI investments will help Adobe rapidly expand its total addressable market. Argus has a “buy” rating and $675 price target for ADBE stock, which closed at $630.50 on Feb. 5.
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 (EUV) lithography equipment necessary to produce advanced AI chips. In a recent interview with Bloomberg, ASML CEO Peter Wennink said AI technology development requires massive amounts of data storage and computing power. Without ASML’s technology, Wennink said “that’s not going to happen.” Kelleher says demand for premium tier edge devices and generative AI applications will accelerate ASML’s EUV equipment sales growth in 2024 and 2025. Argus has a “buy” rating and $1,000 price target for ASML stock, which closed at $898.54 on Feb. 5.
International Business Machines Corp. (IBM)
For years, IBM has been developing ways to adapt its AI supercomputer Watson to revolutionize health care, finance, law and academia. IBM’s portfolio of Watson AI solutions includes applications to improve customer service, automate workflow processes and predict outcomes. IBM’s Watson Studio even helps enterprise customers build proprietary AI applications. In December, IBM and Meta launched the AI Alliance, an international community of AI technology developers committed to open AI innovation. Kelleher says Watsonx.ai is an “enterprise-ready AI and data platform” that “stands in contrast to the closed systems offered by Alphabet and Microsoft.” Argus has a “buy” rating and $225 price target for IBM stock, which closed at $183.42 on Feb. 5.
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. In November 2023, Arista CEO Jayshree Ullal set a new goal of reaching $750 million in annual AI networking revenue by 2025. Kelleher says Arista is uniquely positioned to benefit from accelerating growth of cloud-based data center networking in support of large language models and generative AI technology. Argus has a “buy” rating and $275 price target for ANET stock, which closed at $272.97 on Feb. 5.
More from U.S. News
Election 2024: How Stocks Perform in Election Years
9 of the Best REITs to Buy for 2024
Artificial Intelligence Stocks: The 10 Best AI Companies originally appeared on usnews.com
Update 02/06/24: This story was previously published at an earlier date and has been updated with new information.
