Artificial intelligence has been all the rage this year, sending AI stocks ripping higher. As the sector’s stock prices skyrockets, investors have increasing incentives to look for the top AI stocks to buy.
The result has led both speculative stocks and well-established tech giants higher. It’s established a market capitalization in excess of $1 trillion for Nvidia (NASDAQ:NVDA) while also helping push high growth stocks to new heights.
While there is a concern about how long these trends can remain in place, they have yet to falter thus far. I’ve collected three top AI stocks that investors should consider. Even after the Nasdaq 100 special rebalance, these stocks remain in play. Earnings could tip the scales in the bears’ favor, but last quarter’s earnings were a huge bullish catalyst. Who’s to say that won’t be the case again this quarter?
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) has been the undisputed leader of the AI stock trade so far this year. Shares have more than tripled in 2023, climbing 205% so far on the year. From its 52-week low in October 2022, the stock has more than quadrupled and is up over 300% currently.
At some point, this fiery momentum will wane and the stock price will come down. But until then though, investors are likely to continue betting on Nvidia.
World-renowned billionaire investor Stanley Druckenmiller previously stated that,
“If [AI is] as big as I think it is, Nvidia is something we’re going to want to own for at least two or three years, not for 10 months…And maybe longer.”
He went on to say, “It’s not clear [to] me that Nvidia goes down despite the lofty valuation level,” even if there is a recession.
As for the chart, keep an eye on $440. A clean break below this measure and the 21-day moving average could trigger a decline down toward $400. However, if this current area holds as support, a move back to the recent highs near $478 could be in play. Above that and $500 could be on the table.
DigitalOcean (DOCN)
DigitalOcean (NYSE:DOCN) has struggled over the last few days, but the price action has been decisively bullish over the past few weeks. While the stock is down about 10% from the recent high, shares are still up 25% from the June 26 low.
For the year, DOCN stock is still up more than 80%. Of course, it helps that tech stocks have come booming back to life this year. More specifically, the recent strength in growth stocks has really given DigitalOcean a helping hand.
However, what’s fueled the recent gains is the company’s acquisition of Paperspace, an “AI-focused cloud computing startup.”
The close below $47.25 was discouraging for short-term bulls on July 25. That was the second-quarter high and the 10-day moving average. From here, investors will want to see the stock regain this measure, opening the door back to $50, then potentially the $53s. On the downside, continued selling pressure could put the $44 to $45 area in play, where DigitalOcean finds its 50% retracement and the rising 21-day moving average.
Broadcom (AVGO)
At the start of the year, few investors, if any, realized that Broadcom (NASDAQ:AVGO) was going to become one of the top AI stocks to buy.
“Our revenue today from this strong opportunity represents about 15 percent of our semiconductor business…Having said that it was only 10 percent in fiscal 22 and we believe it could be over 25 percent of semiconductor revenue in fiscal 24.”
Now, it’s one of the AI stocks breaking out.
Shares toil around the $900 mark and just below the highs near $922. If Broadcom stock can power through this high, investors will have their main focus centered on the $1,000 mark. It’s hard to believe that just a few months ago, this stock was stuck in the low-$600s and struggling to rally.
Then the AI wave gave it a lift and it’s been surging higher ever since.
On the date of publication, Bret Kenwell had a long position in DOCN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
