Artificial intelligence (AI) has become a buzzword today. As we can see, there is no stopping the growth of this industry. Tech earnings have proved that AI is a game changer, and several companies have reported record revenue and a rally in AI stocks. Generative AI has become a top spending criterion for many companies, and it caters to several industries. I still believe AI is in a nascent stage, and there is a lot more to come.
It can change our lives in more ways than we can ever imagine, and companies are seeing tremendous opportunities in this sector. Those not investing in AI could lose the race and become redundant in the coming years. If you want to make the most of the AI hype, now is the time to invest in companies set to make it big this year. Here are the three AI stocks to buy in 2024.
AI Stocks to Buy: Advanced Micro Devices (AMD)
Nvidia’s (NASDAQ:NVDA) biggest competitor, Advanced Micro Devices (NASDAQ:AMD) is leaving no stone unturned to lead the AI race. The tech company carved a niche for itself in the industry and has always had an edge in the sector. It is working on providing AI chips. In fact, several organizations — including Microsoft (NASDAQ:MSFT) — are using AMD chips.
Nvidia can’t meet the soaring chip demand, and that is where other AI companies are set to benefit. Also, an improvement is expected in the PC segment this year that will benefit AMD.
The company raised the full-year guidance for its MI300 AI processor from $2 billion to $3.5 billion. That is a sign the management is confident about being able to see a higher revenue on the processor this year. The semiconductor company is in a strong place financially.
It beat earnings expectations in three out of the last four quarters and has been showing strength. AMD has recently announced a cooperation with JR Kyushu aimed at improving the safety of the Japanese bullet trains through AI technology. It marks the entry of AMD in the infrastructure sector and could lead to more expansion in the coming years.
Currently exchanging hands for $176, the stock is a solid buy. It is up 22% year to date and 70% in the past six months. This could be the year of AMD.
Palantir Technologies (PLTR)
The market has rewarded Palantir Technologies (NYSE:PLTR) after it beat analyst expectations and reported its first profit. The company has shown significant progress in the acquisition of commercial clients and balancing the portfolio with the right amount of government and commercial clients. For the longest time, the company relied on the government for revenue, but the change is appreciated.
It built a highly successful Artificial Intelligence Platform where companies can connect their data with large language models and use the information for decision-making. Palantir organized several boot camps to help companies implement and work with its platform. It has already completed more than 560 boot camps for over 400 organizations.
That has helped in high conversions, and the company bagged 103 new deals in the recent quarter. Fundamentally, the company has a very strong balance sheet. Its revenue in the fourth quarter increased 20% YOY, and commercial revenue was up 32% YOY. It is aiming for 40% growth in commercial revenue this year.
Since its IPO about two decades back, the stock hasn’t moved much. It has been moving sideways and is trading between $14 and $26 over the past six months. However, I believe now is an opportunity for an upside. The profit could dramatically expand from here, and AI can take Palantir to new highs. It is one of the best AI stocks to own.
Looking at the company’s potential, the stock looks undervalued to me at $23. This is one stock that can double your money. It is up 39% year-to-date and has rallied since the positive results.
Oracle (ORCL)
A legacy stock, Oracle (NYSE:ORCL) is set to benefit from the AI hype. Known for database software, the company has a rich history and a steady presence in the industry. It has become highly popular in the age of data and AI. In the recent quarter, the company saw the cloud infrastructure revenue soar 52% to $1.6 billion and the cloud revenue increase by 25% to $4.8 billion.
The company is currently building 100 new data centers for Microsoft to cater to the high demand and is positioning itself as a leader in the industry. This tech giant has roots deep into the tech space and has been expanding over the years. It has worked with several organizations in the past and can adapt to the changing demands of the users.
AI is a big opportunity for the company, and it has amped up its portfolio to provide AI tools through the cloud marketplace. It is currently expanding 66 of the existing data centers besides building new ones.
Exchanging hands for $110, ORCL stock looks highly undervalued. Although it is up 6% year to date, it is still down from the 52-week high of $127. There is ample upside for the stock from the current level. Oracle is a dividend stock with a yield of 1.44% and has increased dividends for 9 consecutive years.
On the date of publication, Vandita Jadeja did not hold (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.
