AI, also known as artificial intelligence, is an emerging technology with immense potential. While the concept has been around for a while, recent advancements have made it more practical. Now, computers can analyze data and make real-time decisions independently. The era of intelligent machines is no longer a distant dream but a tangible reality.
AI’s practical applications are revolutionary. It enables machines to learn, adapt, and perform complex tasks. Advanced AI powers cutting-edge technologies like voice and facial recognition, fraud detection, and pattern recognition. In the automotive industry, AI is utilized for real-time monitoring and the development of driverless vehicles. Indeed, the potential of AI is truly groundbreaking.
That said, here are three stocks you should secure once AI booms in the following months.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) stands out among AI stocks for a good reason. Notably, Nvidia is best known for its advanced graphics and video-processing chips. With expertise in high-end computing, AI, and virtual reality, Nvidia is poised to play a vital role in driving the metaverse.
Nvidia’s advanced chips are well-equipped to handle the processing demands of the immersive metaverse. The company’s Omniverse platform, designed for building and operating metaverse applications, also has the potential to become a leading solution for managing 3D data in this digital world.
Despite its incredibly high valuation, Nvidia is still among the most highly-rated stocks in the market. Investors and analysts alike continue to jump on Nvidia, given its picks-and-shovels exposure to the explosive AI megatrend.
The company’s recent guidance boost to revenue of $11 billion in the upcoming quarter, driven by AI, is evidence of why long-term investors are stocking with this name. Of course, if Nvidia can blow those expectations out of the water, a much higher valuation could be possible down the road. However, this company will certainly need to outperform to see such a scenario play out.
Currently, Bank of America recommends NVDA stock as a buy, with a target price of $500. Analysts note the company’s dominance in the GPU market and potential to profit from the surge in growth from AI-related companies as reasons to buy the stock. I agree.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is certainly among the top AI stock picks worth buying right now. The company’s collaboration between OpenAI and Microsoft’s Azure cloud-computing product offers scalable computing power for widespread AI applications. This strategic partnership positions Microsoft as a potential winner in the AI revolution, particularly with the simplification of content creation through generative AI advancements.
Microsoft attributes its impressive first-quarter results to the growth of AI and its partnership with OpenAI. With confidence in the ongoing AI trend, Microsoft anticipates further profitability. The company already serves over 2,500 Azure OpenAI Service customers and provides AI-powered capabilities to 36,000 organizations through its Power Platform.
In the next five years, widespread adoption of generative AI by governments and businesses is expected. Microsoft’s strategic investment in OpenAI and integration of machine-learning capabilities across its products positions it as an AI leader. That said, investing in Microsoft can offer the opportunity to ride the wave of AI advancements and collect dividends along the way.
Baidu (BIDU)
Baidu’s (NASDAQ:BIDU) progress in generative AI bodes well for its future. The integration of Ernie 3.5 into its search engine is expected to improve user experiences and drive wider adoption of generative AI, leading to increased value growth for Baidu.
Baidu has launched a $140 million venture fund to support AI startups in the field of AI-generated content. They aim to foster innovation by encouraging developers to create applications using their large language model. Baidu’s commitment to integrating Ernie Bot across different sectors shows its dedication to enhancing products and services through generative AI. This strategic move highlights their determination to remain competitive in the AI industry and stimulate the growth of a productive AI ecosystem.
Baidu is also expanding its AI capabilities across its product offerings, including chatbots that can summarize financial statements and create presentations. The company’s Ernie Bot platform is in high demand, with over 120,000 Chinese companies signing up for testing. BIDU stock has seen a 32% gain in the past six months, with a 4% increase in 2023.
Despite experiencing a number of recent significant single-day rallies over the past few weeks, BIDU stock remains relatively unchanged from its 2023 low. This lackluster performance is surprising considering the company’s potential in AI. Baidu is currently trading at approximately 12 times this year’s earnings estimates, and analysts predict a growth rate of over 17% for the company. With these indicators, Baidu appears undervalued as one of the top AI stock picks right now.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
