Artificial intelligence, automation and robotics are disrupting virtually every industry. In the past year, the world has gotten a firsthand look at remarkable advances in AI technology, including OpenAI’s ChatGPT AI chatbot, GitHub’s Copilot AI code generation software and Google’s Gemini AI model.
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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 from March 1 Close |
| Microsoft Corp. (ticker: MSFT) | 14.3% |
| Nvidia Corp. (NVDA) | 3.3% |
| Alphabet Inc. (GOOG, GOOGL) | 24.0% |
| Amazon.com Inc. (AMZN) | 3.8% |
| Meta Platforms Inc. (META) | 9.5% |
| Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) | -2.9% |
| Adobe Inc. (ADBE) | 18.2% |
| ASML Holding NV (ASML) | 0.9% |
| International Business Machines Corp. (IBM) | 19.6% |
| Arista Networks Inc. (ANET) | 9.5% |
Microsoft Corp. (MSFT)
After announcing a $1 billion investment in 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 copilots into a single AI experience called Microsoft Copilot. Microsoft reported AI accounted for six percentage points of the 30% growth in its Azure and cloud services division in the fourth quarter. Analyst Joseph Bonner says Microsoft’s cloud services and AI technology make it the premier business technology company. Argus has a “buy” rating and $475 price target for MSFT stock, which closed at $415.50 on March 1.
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, and it’s largely due to the company’s AI exposure. Demand for Nvidia’s high-end AI chips drove staggering 265% revenue growth and 768% net income growth for Nvidia in the fourth quarter. Analyst Jim Kelleher says Nvidia has gained a tremendous early lead in the AI semiconductor design market. Even after the stock’s huge rally, he says Nvidia shares have much more upside ahead. Argus has a “buy” rating and $850 price target for NVDA stock, which closed at $822.79 on March 1.
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 December, Google announced Gemini, its most capable and general AI model ever. However, Alphabet was recently forced to pause a new AI image-generation feature after its inaccurate depictions of the race of historical figures drew widespread criticism. Despite the misstep, Bonner says Google remains a top competitor in the development of generative AI. Argus has a “buy” rating and $170 price target for GOOGL stock, which closed at $137.14 on March 1.
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. Amazon offers a wide range of AI and machine learning services to its AWS cloud customers, including advanced text analytics, automated code reviews and chatbots. In January, Amazon rolled out a new AI tool to answer shoppers’ questions about products on its marketplace. Kelleher says AWS is uniquely positioned to capitalize on the nascent AI-as-a-service market following Amazon’s $4 billion investment in Anthropic. Argus has a “buy” rating and $185 price target for AMZN stock, which closed at $178.22 on March 1.
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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. In January, Meta said its artificial intelligence technology has helped boost return on spending for advertisers by an average of 32%. Bonner says Meta is competitive in generative AI technology and will continue to integrate and improve AI features that will help the company optimize efficiency. Argus has a “buy” rating and $550 price target for META stock, which closed at $502.30 on March 1.
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 generative AI is driving demand for high-end chips, and Taiwan Semi is the leading merchant fabrication investment option. He says the stock is attractively valued based on its long-term growth prospects. Argus has a “buy” rating and $130 price target for TSM stock, which closed at $133.90 on March 1.
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, Adobe’s VP of Generative AI said the company is transitioning from a software company to an AI company. Bonner says Adobe will continue to ramp up investments in generative AI features. Argus has a “buy” rating and $675 price target for ADBE stock, which closed at $570.93 on March 1.
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, ASML CEO Peter Wennink said AI technology development requires massive amounts of data storage and computing power. Without ASML’s technology, Wennick said “that’s not going to happen.” Kelleher says strong guidance from Taiwan Semiconductor fueled by AI demand is bullish for ASML given Taiwan is ASML’s largest regional market. Argus has a “buy” rating and $1,000 price target for ASML stock, which closed at $990.94 on March 1.
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 Platforms launched 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 features three comprehensive foundation models. Argus has a “buy” rating and $225 price target for IBM stock, which closed at $188.20 on March 1.
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 generative AIs have led to a boom in cloud-based data center networking demand, a market in which Arista holds a definitive leadership position. Argus has a “buy” rating and $315 price target for ANET stock, which closed at $287.74 on March 1.
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Artificial Intelligence Stocks: The 10 Best AI Companies originally appeared on usnews.com
Update 03/04/24: This story was previously published at an earlier date and has been updated with new information.
