The 3 Best AI Stocks to Buy in February 2024


  • As leaders in the AI revolution, these best AI stocks to buy are set for more gains in 2024.
  • Arm Holdings (ARM): Revenues are soaring due to the growth in GPU demand and AI consumer devices.
  • ServiceNow (NOW): The Now Platform has become the go-to solution for AI-enabled digital transformation.
  • Nvidia (NVDA): The demand for its AI GPUs is insatiable and it’s staying ahead with more powerful releases.

Despite the significant progress made in artificial intelligence (AI) over the past decade, we are still on the cusp of a profound transformation. AI integration will occur across all sectors of society and industry. This article discusses the best AI stocks to buy for this revolution.

As data generation grows, AI’s applications and capabilities are expanding. Today, data is growing exponentially and organizations need ways to extract value from this data. This data deluge can be overwhelming with the proliferation of internet-connected devices, social media and the Internet of Things (IoT). However, AI applications can learn from this data, improving decision-making and the customer experience.

Indeed, artificial intelligence has become a competitive advantage. According to the Boston Consulting Group, 85% of C-suite executives plan to increase their investments in AI and GenAI this year. This means businesses must adopt the technology; otherwise, they risk losing to the competition.

Anticipating the surge in AI spending, markets have rewarded the best AI stocks to buy. Stocks like Nvidia (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT) are dragging the markets higher. Despite their impressive runs, they are still candidates for investment. Let’s explore these top AI companies in greater detail.

Arm Holdings (ARM)

The Arm logo seen at semiconductor and software design company Arm Holdings' US Headquarters in San Jose, California. ARM IPO
Source: Tada Images /

After the recent earnings report, Arm Holdings (NASDAQ:ARM) stunned market participants, gaining over 50%. Investors were impressed by the several growth tailwinds highlighted by management.

First, on the earnings call, management highlighted the revenue growth potential as customers migrate from its Armv8 to Armv9 product. According to management, the latter brings in twice the royalty amount. Thus, Arm will earn higher loyalty revenues as customers migrate to the new platform.

Secondly, the company is enjoying AI tailwinds from data-center GPUs and more AI devices. Recently launched edge devices with AI capabilities, like Samsung Galaxy S24 or Google’s Gemini Nano Pixel 6, have boosted revenues. Additionally, on the data center front, training GPUs like the Grace Hopper 200 are running on Arm’s architecture. As AI devices grow, there will be a licensing growth tailwind.

The third growth driver is the Compute Subsystems segment. Arm has been designing completed blocks of chip designs and offering them to customers. The first design, Microsoft Cobalt, has enjoyed tremendous success due to the short validation and time-to-market. Management expects these designs will be an area of growth.

Considering these tailwinds, management expects Q4 FY2024 royalty revenues to grow 30% year-over-year. AI needs energy-efficient computers, which is a core competency of Arm’s architecture. Another strength is the large community of developers that develops on Arm. All these tailwinds make Arm Holdings one of the best AI stocks to buy.

ServiceNow (NOW)

ServiceNow office building in Silicon Valley;
Source: Sundry Photography /

From its IT service management roots, ServiceNow (NYSE:NOW) is becoming a powerhouse in AI-driven digital workflow solutions. Today, its software-as-a-service solution stands out for its application of AI to streamline business operations. Taking the strength of its Now Platform, NOW stock is one of the best AI stocks to buy.

The Now Platform integrates AI and analytics directly into digital workflows, automating routine tasks. Furthermore, it features AI Search, powered by natural language understanding and machine learning. With this capability, users receive personalized and context-aware responses. As a result, resolution times are better, leading to improved user satisfaction.

ServiceNow is seeing tremendous growth as customers rush to implement its generative AI solutions. For instance, Siemens AG (OTCMKTS:SIEGY) is utilizing Now Assist in its human resource department to resolve workforce cases faster. A second example is that developers are using its text-to-code feature, increasing productivity by 50%.

Due to the AI features on the Now Platform, revenues are soaring, with 168 deals exceeding $1 million in net new annual contract value in Q4 2023. The company is also seeing growth in the government sector, a previously underpenetrated vector. It has signed deals with U.S. federal, state and local authorities and international governments like Australia and the U.K.

As AI products like Now Assist, Vancouver and Virtual Agent gain traction, management is confident of its $10 billion ACV target. In FY2024, they project stronger-than-expected growth and estimate subscription revenues between $10.555 and $10.575 billion, up 21.5%. The Now Platform is helping organizations accelerate growth and boost productivity with AI, making NOW stock a must-buy.

Nvidia (NVDA)

Nvidia corporation (NVDA) logo displayed on smartphone with stock market chart background. Nvidia is a global leader in artificial intelligence hardware and software
Source: Poetra.RH /

This semiconductor giant is the backbone of AI research and applications. Nvidia’s role in AI cannot be overstated. The company’s GPUs, such as the A100 and the cutting-edge H100 Tensor Core GPU, are foundational to training complex AI models.

Today, Nvidia’s H100, built on the Hopper architecture, represents the pinnacle of AI innovation. The piece of hardware offers unprecedented compute efficiency and scalability for AI workloads. Revenues are soaring as cloud services providers, governments and organizations look to secure these leading-edge GPUs.

While competitors like Advanced Micro Devices (NASDAQ:AMD) try to catch up, Nvidia is surging ahead with next-generation releases. In August 2023, it unveiled the Hopper GH200, with deliveries set for the second quarter of 2024. It also has the Black GB200 planned for a later release per the product road map. These latest options offer faster training of larger, more sophisticated models across various applications.

The company’s dominance also extends beyond hardware to software. CUDA, its parallel computing platform, has become the default for developers training AI models. CUDA, plus its software libraries to support AI practitioners, have enhanced its competitive advantage.

Even though NVDA stock has run up over 40% year-to-date, it’s still one of the best AI stocks to buy. Consensus estimates call for 268% and 68% EPS growth in FY2024 and FY2025, respectively. The EPS estimate for the year ending January 2025 is $20.71, valuing the company at 35 times forward earnings.

NVDA stock remains on Goldmans’ conviction buy list, with analyst Toshiya Hari recently bumping the price target from $625 to $800. New product cycles and increasing AI use cases will spur more revenue growth. It is one of the best-positioned stocks to capitalize on AI.

On the date of publication, Charles Munyi 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 Publishing Guidelines.

Charles Munyi has extensive writing experience in various industries, including personal finance, insurance, technology, wealth management and stock investing. He has written for a wide variety of financial websites including Benzinga, The Balance and Investopedia.

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