Artificial Intelligence Stocks: 10 Best AI Companies | Invest

Artificial intelligence, automation, and robotics are disrupting virtually every industry. Over the past year, the world has seen first-hand impressive advances in AI technology, including OpenAI's ChatGPT AI chatbot, GitHub's Copilot AI code generation software, and Google's Gemini AI model.

Companies that don't invest in AI products and services, such as machine learning, large-scale language models, smart applications and appliances, digital assistants, synthetic media software, and self-driving cars, risk becoming obsolete. While countless companies stand to benefit from AI, only a handful of stocks have made AI and automation a core part of their business.

Here are the 10 best AI stocks to buy, according to Argus.

*Based on 12-month target price.

Microsoft reportedly invested $13 billion in OpenAI and integrated ChatGPT into its Bing search engine. Microsoft has also unified all of its AI Copilots into a single AI experience called Microsoft Copilot. In March, the company announced its first Surface PC with a dedicated Copilot AI button that provides quick and easy access to AI chatbots powered by OpenAI. Analyst Joseph Bonner said Microsoft's integration of cloud services and AI technology products and services could very well make Microsoft a leading investment choice in the business technology space. Argus rates MSFT stock as a “buy,” with a price target of $475 and a closing price of $413.54 on May 6th.

Alphabet, the parent company of Google and YouTube, uses AI and automation in nearly every aspect of its business, from ad pricing to content promotion to email spam filters. Google announced his Bard AI chatbot in March 2023. In December, Google announced Gemini, its most powerful AI model to date. Google is reportedly considering making AI search features available only to premium subscribers, which could increase subscription revenue. Alphabet was an early leader in generative AI, and Bonner credits his Google Cloud with helping his Alphabet diversify away from advertising. Argus rates GOOGL stock a “buy” and has a price target of $200 (versus the May 6 closing price of $168.10).

Amazon is integrating AI into every aspect of its business, including targeted advertising, 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 would invest $2.75 billion in Anthropic, the maker of AI-based models and chatbot Claude, bringing its total investment to up to $4 billion. Analyst Jim Kelleher says the partnership with Anthropic meaningfully enhances his Amazon AWS offering. Argus rates AMZN stock as a “buy,” with a price target of $185 and a closing price of $188.70 on May 6th.

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 exposure to AI. At its annual developer conference in March, Nvidia announced its new Nvidia Blackwell platform and AI chips, which it claims can perform certain tasks 30 times faster than the previous generation. Kelleher said Nvidia continues to develop industry-leading generative AI tools and that its new, higher-priced products will help the company grow its profits. Argus rates NVDA stock as a “buy,” with a price target of $950 and a closing price of $921.40 on May 6th.

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 his April, Meta announced Meta AI, a new AI assistant built using the Llama 3 model. The company claims this is the most intelligent AI assistant available for free. Bonner said Meta delivered impressive profits and sales in the first quarter, but its rising AI technology costs surprised Wall Street. Bonner argues that investors should trust Meta CEO Mark Zuckerberg's track record of effectively monetizing technology. Argus has a “buy” rating on META stock, a price target of $550, and a May 6 closing price of $465.68.

Taiwan Semiconductor Manufacturing Co., Ltd. (TSM)

Taiwan Semiconductor Manufacturing is the world's largest pure semiconductor foundry. Taiwan Semi manufactures all advanced AI semiconductors for Nvidia and other AI chip manufacturers. CEO CC Wei recently described the AI-driven demand that Taiwan Semiconductor is experiencing, especially the demand for upgrading from traditional servers to AI servers, as “insatiable demand.” Kelleher said AI-related demand is growing, and slower inflation, increased consumer purchasing power, and corporate investment in generative AI applications will be positive catalysts for the fabless semiconductor market and Taiwan Semi. Argus has a buy rating on TSM stock, with a price target of $160 and a closing price of $142.83 on May 6th.

Adobe makes creative content software and other applications used in marketing and e-commerce. The company's Firefly-generated machine learning models are gaining customer interest across Photoshop, Illustrator, and other platforms. Adobe has also applied Sensei AI and machine learning technology to Adobe Analytics, Campaign, and Target products. Adobe recently introduced an AI assistant to its Reader and Acrobat applications that can search, summarize PDF documents, and answer questions. Bonner said Adobe's investment in generative AI will help capture the entire rapidly expanding addressable market. Argus rates ADBE stock as a “buy,” with a price target of $675 and a closing price of $493.59 on May 6th.

ASML manufactures photolithography systems and other processing equipment used in semiconductor manufacturing. ASML is the only major manufacturer of extreme ultraviolet (EUV) lithography equipment needed to manufacture advanced AI chips. In February, ASML gave media members a tour of its new high-NA extreme ultraviolet system. The system can print lines just 8 nanometers thick on semiconductors, making it essential for the development of AI technology. Kelleher expects sales of ASML's leading EUV equipment to accelerate in response to demand from generative AI applications and premium-tier edge devices. Argus rates ASML stock as a “buy,” with a price target of $1,000 and a closing price of $916.92 on May 6th.

International Business Machines Corporation (IBM)

For years, IBM has developed ways to adapt its AI supercomputer Watson to revolutionize medicine, finance, law, and academia. IBM's portfolio of Watson AI solutions includes applications that improve customer service, automate workflow processes, and predict outcomes. IBM's Watson Studio also helps enterprise customers build their own AI applications. In December 2023, IBM and Meta Platforms launched the AI ​​Alliance, an international community of AI developers working on open AI innovation. Kelleher said IBM's planned acquisition of HashiCorp will improve the infrastructure and security of its AI solutions. Argus has a buy rating on IBM stock, with a price target of $225 and a closing price of $168.61 on May 6th.

Arista Networks, Inc. (ANET)

Arista Networks provides 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 you need for intensive AI workloads. In November 2023, Arista CEO Jayshree Ural set a new goal of reaching $750 million in annual AI networking revenue by 2025. Kelleher said Arista is uniquely positioned to take full advantage of generative AI-driven growth in cloud-based data center networking. He calls Arista a top long-term investment in cloud networking. Argus has a “buy” investment decision on ANET stock, with a price target of $315, and the closing price on May 6th is $278.82.