AI stocks have emerged as a top investment trend, driven by the increasing value of artificial intelligence and the exponential growth of data. However, for investors following this trend, most of the news flow thus far has centered on the semiconductor industry, and giants such as Nvidia (NASDAQ:NVDA).
That makes sense, considering the move Nvidia has made this year, and its ascension into the trillion-dollar club. However, there are plenty of other AI stocks worth considering, including many of the top tech names in this sector.
Now, the three names below are household names, and are often associated with artificial intelligence technology. That said, these are the three companies I think should be the leading stocks in the AI discussion right now.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is riding the AI wave, with its stock surging 39% this year, in line with the NASDAQ index. The company’s investment in OpenAI and its leadership in generative AI solidify its position in the sector. With a strong track record as a cash cow, Microsoft is projected to grow revenue by around 11.8% year-over-year (YoY). Investors have multiple revenue-generating opportunities with Microsoft, making it a sector proxy.
Microsoft’s fiscal third quarter revenue reached $52.9 billion, a 7% increase from the previous year. CEO Satya Nadella has set ambitious revenue targets, aiming to reach $500 billion by 2030, which would be a significant doubling of its current revenue. Nadella’s confidence in this growth plan should provide reassurance to investors.
Microsoft stands out from its tech counterparts due to its strong presence in the corporate and business sectors. Many companies rely on Windows PCs and Excel for their daily operations, while cloud services have become essential for online businesses. LinkedIn has become a leading platform for job searching and recruitment. Microsoft’s diverse offerings make it deeply embedded in various industries.
Alphabet (GOOG)
The emergence of AI technologies has raised concerns about the future of Alphabet’s (NASDAQ:GOOG) traditional internet search and digital advertising. However, investors should not hastily dismiss the tech giant, as it possesses key attributes that warrant attention.
With over $115 billion in liquidity, Alphabet has ample funds to invest in AI research and acquisitions. Its strong balance sheet and cash reserves provide flexibility and optionality for the company. Whether through in-house development or strategic investments, Alphabet is well-positioned to adapt to changes in the digital ad business and explore new technologies.
Google’s Bard is just one part of its broader AI strategy, which includes user-friendly AI toolkits that empower developers. With the integration of Labs to Chrome’s desktop, Alphabet has strengthened its position in the AI space, rivaling Microsoft. The company is well-positioned to capitalize on the growing AI industry, leveraging generative AI, AI-powered Google ads, and advancements in healthcare. Alphabet’s adaptability and resilience make it a standout player in the evolving AI landscape.
C3.ai (AI)
C3.ai (NASDAQ:AI) is a leading Silicon Valley AI software company that serves major enterprises, including the U.S. Air Force. Their prebuilt SaaS platforms are preferred over costly in-house development. Analysts, like Daniel Ives from Wedbush, maintain a positive outlook with a $50 target, implying a 43% upside. Caution is advised for long-term investors, but short-term traders could see a 6% rise in July.
C3.ai has undergone a transformation, now focusing on AI enterprise software. With its C3 AI Platform, the company offers application development and deployment tools for enterprises. It also provides AI solutions for various industries. Benefiting from the AI stock surge, C3.ai’s share price has soared by almost 202% YoY.
C3.ai has provided revenue guidance for the upcoming quarter, aligning with Wall Street’s expectations. However, short sellers remain pessimistic, potentially due to a broader association of AI stocks. It’s important to note that not every AI firm can replicate Nvidia’s success. C3.ai’s steady progress in enterprise AI suggests that the negative sentiment may be excessive.
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.
