Machine learning stocks to buy that will make you a millionaire: May

The next phase of technology is here: machine learning and AI will transform the world for the better. While these stocks may seem like they are trading in a bubble, investors need to remain astute and have a long-term vision for these disruptive emerging technologies. In one form or another, AI will grow into a long-term movement that will be adopted by nearly every industry, if not every company, around the world to improve productivity and efficiency.

Of course, concerns about an AI bubble are not groundless. To avoid such large drawdowns, it is important to have a well-diversified portfolio with the right stocks. Just because a company mentions AI doesn't mean it's immediately a good investment. We are already seeing this with exits in industries such as EVs and fintech. So if you want to increase exposure to machine learning in your portfolio, consider buying these 3 machine learning stocks and thank us over the next 5 or 10 years.

Palantir (PLTR)

Palantir (New York Stock Exchange:PLTR) grew from a meme stock to a legitimate business, generating hundreds of millions of dollars in profits each year. The company's stock is trending at an average analyst price target of $21.45, with a high price target of $35.00. This high-end target represents an upside of more than 60% for him from his current price.

The stock has been polarizing on Wall Street since its direct listing debut in September 2020. While the first few years have been a roller coaster for investors, the stock has gained due support through its machine learning-powered integrated operational deployment infrastructure. Moreover, this hype is no more legitimate than Stanley Druckenmiller, who revealed that he bought nearly 770,000 shares in the recent quarter. For those who don't know Druckenmiller, Druckenmiller has been supporting his ML revolution for years. Nvidia (NASDAQ:NVDA) is his latest victory amid a massive rally over the past year.

Palantir's problem has always been its reputation. The stock currently trades at 21 times sales and 65 times expected earnings. Nevertheless, current growth prospects are solid, with revenues growing at a five-year compound annual growth rate (CAGR) of 12% and a three-year CAGR of 21%. As multiples begin to compress, investors should consider his Palantir a legitimate money-making competitor in his ML space.

Baidu (BIDU)

Baidu (NASDAQ:Bidou) is a Chinese technology company that recently attracted over 200 million users to its new Ernie AI chatbot. Shares are down about 4.0% this year, as Chinese stocks have lagged broader gains in U.S. stocks. Despite this, Wall Street maintains the average analyst price target at $153.36, about 40% above the current price.

Baidu recently attracted attention when it reported that it is interested in partnering with. tesla (NASDAQ:TSLA) for using robotaxis in China. Investors should keep an eye on CyberCab, which will be unveiled in the U.S. this August, as China looks to get some products ready for immediate deployment. Not only is this potentially one of the most powerful new channels for revenue growth for both companies, it could also cement Baidu's position as the leader in China's auto sector as it races for first-mover advantage. .

Like many Chinese ADR stocks, BIDU's multiple is low. For example, the company's P/E ratio of 9.79x is 25% lower than the sector median. In addition to such a discounted valuation, Baidu has maintained a high revenue CAGR of 14% over his 10-year period. For investors who can tolerate the risk associated with Chinese stocks, Baidu looks like a bargain.

Micron Technologies (MU)

micron technologies (Nasdaq:Mu) is an American chip maker that is seeing a huge surge in demand due to AI and machine learning technology. Analysts are bullish on MU, with 28 out of 31 recommendations released in May rated as “buy” or “strong buy.” Analysts' average price target is $145.52, nearly 15% above the current price.

The chipmaker has already hit record highs this month, reinvigorating demand for its products. This growth potential is largely due to the fact that Micron is one of only three DRAM memory chip manufacturers in the world. These chips can store vast amounts of data, which can help accelerate the training of AI and machine learning techniques. These DRAM chips account for 71% of Micron's revenue as of Q2 2024, which bodes well for the stock's upward momentum.

Typically, when a stock trades at an all-time high, its valuation also increases. That's not exactly the case, as Micron's stock trades at just 7.5 times sales and 17 times forward earnings. As revenue growth accelerates, Micron is gaining attention as one of the under-the-radar ways Micron could gain exposure to his AI and potentially join the million-dollar club.

On the date of publication, Ian Hartana and Vayun Chugh did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publishing Guidelines.