Artificial intelligence remains a major market force, propelling a handful of technology stocks to new heights. Not only is the technology behind AI stocks likely to cause major changes in society, but it also represents a huge investment opportunity.
Estimates vary, but AI is expected to generate trillions of annual revenues within a decade. Companies are working around the clock to advance research, improve technology, develop new AI tools, and find ways to monetize their creations.
While many people worry about the long-term impacts of developing artificial intelligence, citing issues such as the loss of human jobs and the spread of disinformation, there appears to be no way to put this genie back in its bottle.
So here are the best AI stocks to consider buying for November.
Investors needing more evidence of Nvidia’s (NASDAQ:NVDA) dominance in AI need only look at the company’s just-released third-quarter financial results. Nvidia smacked the cover off the ball with another blowout quarter that showed global demand for its microchips and semiconductors remains red hot. The company announced earnings per share of $4.02 versus $3.37 that was expected on Wall Street. Revenue in the quarter tripled to $18.12 billion, beating estimates of $16.18 billion.
Nvidia also reported that its net income for Q3 rose 1,274% to $9.24 billion, or $3.71 a share, from $680 million, or 27 cents per share, a year ago. The company’s data center revenue increased 279% to $14.51 billion, and its gaming segment saw sales rise 81% to $2.86 billion. In terms of guidance, Nvidia forecast $20 billion of revenue for the current fourth quarter, which implies 231% year-over-year growth. Nvidia also just launched its most powerful chip yet, the “GH200 GPU.”
The company is already seeing huge demand for its new GH200 GPU microchip that can power the world’s most advanced AI applications. Only a couple of years ago, Nvidia derived most of its revenue from the sale of its microchips to power video games and personal computers (PCs). Now, AI is the company’s main sales driver. NVDA stock is up 250% this year, but analysts see more upside ahead. The median price target on Nvidia’s shares is 34% higher than current levels.
If the recent drama at OpenAI taught us anything, it’s that Microsoft (NASDAQ:MSFT) is a major force in the AI sector. Microsoft CEO Satya Nadella was publicly involved in the back-and-forth involving OpenAI CEO Sam Altman as the situation evolved.
Nadella is now being credited with helping to get Altman reinstalled as CEO days after he was fired by OpenAI’s board of directors. And MSFT stock rose steadily as the drama unfolded, hitting an all-time high.
Having invested more than $10 billion in OpenAI, Microsoft has access to the company’s bleeding edge technology and is cascading it across its products and services, from its Bing search engine to Xbox video games. A couple of other things that recently came to light are that Microsoft is creating its own AI research laboratory and is planning to develop its own microchips to power future AI applications. The company’s leadership position in AI has pushed MSFT stock up nearly 60% this year.
For a dark horse candidate in the AI race, look to IBM (NYSE:IBM). The legacy tech company is quietly making some meaningful progress in artificial intelligence, recently announcing a fix for one of the biggest problems afflicting the industry. IBM has developed software and tools that it says prevent AI models from hallucinating and misinterpreting human requests. This has been hailed by some analysts as a potentially huge breakthrough that can help advance AI technologies moving forward.
According to IBM, its new software, called “WatsonX,” includes tools that stop AI models from fabricating search results or providing offensive material, a phenomenon known in tech circles as “hallucinating.” IBM said its new guardrails for AI will be widely available starting Dec. 5. The platform will help companies such as Microsoft, OpenAI, and others, to ensure that their AI applications are safe, unbiased, and factually correct. IBM said its new software would help manage AI risks.
Beyond solving the hallucination problem, IBM is also viewed as a major AI researcher and a company that is focused on advancing the science behind artificial intelligence. IBM’s stock is up 10% this year. All in all, it’s one of those AI stocks to consider.
On the date of publication, Joel Baglole held long positions in NVDA and MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.