Artificial Intelligence Stocks: The 10 Best AI Companies | Investing

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.

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:

*Based on 12-month target prices.

Microsoft has invested a reported $13 billion into OpenAI and has integrated ChatGPT into its Bing search engine. Microsoft has also integrated all its AI copilots into a single AI experience called Microsoft Copilot. In March, the company revealed its first Surface PCs that come with a dedicated Copilot AI button to quickly and easily access an OpenAI-backed AI chatbot. Analyst Joseph Bonner says Microsoft’s cloud services and AI technology product and service integration may very well make it the premier investment option in the business technology space. Argus has a “buy” rating and $475 price target for MSFT stock, which closed at $413.54 on May 6.

Google and YouTube parent company Alphabet uses AI and automation in virtually every facet of its business, from ad pricing to content promotion to email spam filters. Google launched its Bard AI chatbot in March 2023. In December, Google announced Gemini, its most capable AI model ever. Google is reportedly considering only offering its AI search features to premium subscribers, which could potentially boost subscription revenue. Alphabet is an early leader in generative AI, and Bonner says Google Cloud is helping diversify Alphabet away from advertising. Argus has a “buy” rating and $200 price target for GOOGL stock, which closed at $168.10 on May 6.

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 March, Amazon announced it is investing $2.75 billion in Anthropic, maker of AI foundation model and chatbot Claude, bringing its total investment up to $4 billion. Analyst Jim Kelleher says the Anthropic partnership meaningfully strengthens Amazon’s AWS offerings. Argus has a “buy” rating and $185 price target for AMZN stock, which closed at $188.70 on May 6.

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. At its annual developer conference in March, Nvidia unveiled its new Nvidia Blackwell platform and AI chips, which it claims can perform certain tasks 30 times faster than the previous generation. Kelleher says Nvidia continues to develop industry-leading generative AI tools, and its new, higher-priced products will help the company expand margins. Argus has a “buy” rating and $950 price target for NVDA stock, which closed at $921.40 on May 6.

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. In April, Meta announced Meta AI, a new AI assistant built using its Llama 3 model that the company claims is the most intelligent AI assistant available for free. Bonner says Meta delivered impressive earnings and revenue numbers in the first quarter, but its mounting AI technology expenses spooked Wall Street. Bonner says investors should trust Meta CEO Mark Zuckerberg’s track record of effectively monetizing technology. Argus has a “buy” rating and $550 price target for META stock, which closed at $465.68 on May 6.

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. CEO C.C. Wei recently described the AI-driven demand Taiwan Semiconductor is experiencing as “insatiable,” particularly when it comes to demand for upgrades from traditional servers to AI servers. Kelleher says AI-related demand is growing, and slowing inflation, improved consumer buying power and enterprise investments in generative AI applications will be positive catalysts for the fabless semiconductor market and for Taiwan Semi. Argus has a “buy” rating and $160 price target for TSM stock, which closed at $142.83 on May 6.

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. Adobe recently launched an AI assistant in its Reader and Acrobat applications that can search, summarize and answer questions about PDF documents. Bonner says Adobe’s generative AI investments will help it capture a rapidly expanding total addressable market. Argus has a “buy” rating and $675 price target for ADBE stock, which closed at $493.59 on May 6.

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 February, ASML gave media members a tour of its new High-NA extreme ultraviolet system, which can print lines on semiconductors just eight nanometers thick and will be essential for developing AI technology. Kelleher projects sales of ASML’s leading EUV equipment will accelerate in response to demand from generative AI applications and premium-tier edge devices. Argus has a “buy” rating and $1,000 price target for ASML stock, which closed at $916.92 on May 6.

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 2023, IBM and Meta Platforms launched AI Alliance, an international community of AI developers committed to open AI innovation. Kelleher says IBM’s planned HashiCorp acquisition will improve the infrastructure and security of its AI solutions. Argus has a “buy” rating and $225 price target for IBM stock, which closed at $168.61 on May 6.

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 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 capitalize on generative AI-driven growth in cloud-based data center networking. He says Arista is a top-tier long term investment in cloud networking. Argus has a “buy” rating and $315 price target for ANET stock, which closed at $278.82 on May 6.