SPECIAL REPORT The Top 7 Stocks for 2024

3 AI Stocks to Keep On Your Radar This Winter

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  • Now’s a great time to consider these three promising AI stocks. 
  • Nvidia (NVDA): Provides the back-end computing power supporting this entire space.
  • UiPath (PATH): Growing buzz around automation and generative AI is real, and this company is at the forefront of those trends.
  • Aerovironment (AVAV): This company’s impressive funded backlog is worth considering on its own.
AI stocks - 3 AI Stocks to Keep On Your Radar This Winter

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As generative AI gains momentum, many growth investors seek the best AI stocks. Indeed, artificial intelligence technology is reshaping life and work. With 40% of organizations increasing AI investments, identifying genuine AI beneficiaries is crucial.

In 2023, AI emerged as a transformative force for business, offering unique investment opportunities. AI’s capacity to mimic human intelligence, learn from data, and enhance productivity has disrupted traditional models. Rapid data processing and versatility make AI relevant in sectors from healthcare to e-commerce, offering diverse investment options with growth potential.

Here are three AI stocks with strong financials and clear AI visions for those who want to capitalize on this long-term trend.

Nvidia (NVDA)

Nvidia corporation (NVDA) logo displayed on smartphone with stock market chart background. Nvidia is a global leader in artificial intelligence hardware.
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Nvidia (NASDAQ:NVDA) remains the premier AI stock to buy because this company provides most of the computing power for companies operating in this space. Via the company’s high-performance GPUs and CPUs, most AI technology is made possible by Nvidia’s advancements. Unsurprisingly, this has led to some strong results of late and growth that have led to a valuation many may have thought would be unheard of.

Nvidia has seen significant triple-digit revenue growth in recent quarters (on a year-over-year basis), with estimates of 100% growth this fiscal year and 46% in the next. Despite a 170% year-to-date gain, Nvidia maintains a strong position in AI and deep learning, boasting over 80% GPU market share, outperforming rivals by a wide margin. Nvidia has also built a robust ecosystem with tools like CUDA and cuDNN, widely embraced by AI developers, bolstering their AI chips’ effectiveness.

Although worries about U.S. restrictions on AI chip exports and rising interest rates impacted NVDA stock, it remains a leader in global AI chip demand. Additionally, Nvidia also ventured into generative technology and partnered with Arm Holdings to explore CPU design. High demand for AI and computational power drove progress in the past year.

UiPath (PATH)

Image of AI trading by analyzing stock indicators; buy and sell, stock chart
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UiPath (NYSE:PATH) aims to revolutionize office tasks using RPA software and software bots. Their Business Automation Platform empowers users to create and manage bots without coding skills, automating repetitive tasks across business functions.

Accordingly, like the other AI-related stocks on this list, UiPath has shown resilience and growth in a market filled with uncertainties. The company has also reported impressive recent results, with UiPath’s revenue growing 18.6%, reaching $287.3 million this past quarter. While net income declined with a $60.4 million loss, UiPath exceeded EPS projections by 172.5%, achieving an EPS of $0.09 compared to the expected $0.03.

Moreover, the company’s collaboration with Apprio and the introduction of ‘Autopilot’ demonstrate UiPath’s commitment to automation technology. I think this is a stock to put on the watch list right now, at the very least.

Aerovironment (AVAV)

Drone flying over landscape representing uvas stock
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Despite global conflicts, AeroVironment (NASDAQ:AVAV), a top drone manufacturer, anticipates substantial growth. The prolonged Ukraine conflict, U.S. involvement, and surging product sales led to a 40% Q2 revenue increase to $152 million and a remarkable 361% net income rise.

AeroVironment, a defense contractor renowned for unmanned aerial vehicles like the Switchblade drone, gained prominence for its critical role in Ukraine’s defense. This conflict highlighted the transformative impact of weaponized drones, deterring large armies like Russia’s. Despite analysts foreseeing modest gains, AVAV’s recent performance suggests the need for a potential price target adjustment.

Additionally, AeroVironment’s acquisition of Tomahawk Robotics aims to boost its market presence and product enhancement. In fiscal year 2024, revenue and net income surged by 40% and 361% year-over-year. The company forecasts fiscal year 2024 revenue between $645 million and $675 million, with a growing backlog and 38% year-to-date stock gain.

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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.


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