These days, AI stocks are almost selling like pancakes, and I can’t blame investors. With almost every tech and tech-adjacent company announcing artificial intelligence integration into their business processes, AI service providers are getting more clients.

At the same time, SaaS companies are injecting GPT into their existing platforms, allowing them to expand their offerings and rake in more revenue. Indeed, the AI trend is at full throttle, and everyone is eager to ride it to the top. 

However, we can’t just buy every company with an “artificial intelligence” stamp on its products. Trends live and die all the time — and AI is no exception — but companies with solid operational foundations will always outlive the trend that got them in the spotlight. Therefore, investors must be more picky when choosing AI stocks, even if everyone seems to be buying them hand over fist. 

So, today, I’ll discuss three stocks that seem to have what it takes to succeed. To get this list, I screened the market using the following criteria: 

• Analyst ratings: Minimum of “buy.”
• Analyst coverage: Minimum of 12 analysts covering the stock.
• Earnings growth: Positive growth in the last year.
• Revenue growth: At least 10% in the last two years. 

Then, I took the top three based on the earnings growth in their latest fiscal year and will present them starting from number one. Here are the results:

ServiceNow (NOW)

ServiceNow (NYSE:NOW) offers a 360-degree platform that allows businesses to automate manual tasks and assist in monitoring, engagement and operations. Its platform can be used in various industries, including education, government, energy, utilities, financial services and healthcare. 

To further improve its offering, ServiceNow clients now have access to generative AI through Now Assist, which it says is a good fit for “every workflow.” The service is powered by Microsoft’s (NASDAQ:MSFT) Co-Pilot and can be used for summarization, content creation, coding and data analytics, among other things. 

In 2023, ServiceNow started reaping the benefits of its AI investments. Revenue jumped by 24% year-over-year (YOY), driven by subscription business growth. Contracts exceeding $1 million also increased 33% YOY, while the company ended the year with a 99% renewal rate. Lastly, earnings grew exponentially by 427%. 

Furthermore, its Q2 2024 report indicates it still has gas in the tank. ServiceNow exceeded revenue and profitability guidance, which led to its increasing full-year subscription outlook from 20.5% to 22% on the high end. CEO Bill McDermott said:

“Our relevance as the AI platform for business transformation remains stronger than ever as CEOs are looking for new vectors of growth, simplification and digitization. ServiceNow intends to reinvent every workflow, in every company, in every industry, with GenAI at the core.”

Its AI partnerships and global expansion efforts have garnered a “strong buy” rating from Wall Street analysts, ranking it as one of the top stocks for exponential growth in the future. 

Palo Alto Networks (PANW)

Palo Alto Networks (NASDAQ:PANW) is an operational technology security solutions leader. The company has embraced AI to enhance its security products, using its proprietary Precision AI, which uses machine learning and deep learning to assist its cybersecurity. 

In 2023, Palo Alto Networks’ revenue increased 25% YOY, rising from $5.5 billion to $6.9 billion. Additionally, the company turned the previous year’s loss of 90 cents per share into a profit of $1.45, a 261% improvement. 

The excellent financial performance and expert approval make Palo Alto Networks one of the best AI stocks to consider now. Wall Street analysts agree that the consensus rating for PANW stock is a “strong buy.”

Dayforce (DAY)

Dayforce (NYSE:DAY) is a software company offering solutions for human capital management needs. These needs include payroll, workforce planning, benefits tracking and other related business processes. 

Some of the company’s software offerings include:

• Powerpay: A cloud HR and payroll solution for the Canadian small business market.
• Dayforce Human Resources: Provides an internal repository of HR-related records.
• Dayforce Workforce Management: Helps organize workforces by configuring the system to meet complex employment and working time rules and policies.
• Dayforce Wallet: A digital payment solution that gives employees instant access to their net earnings.

More notably, Dayforce recently launched Dayforce Co-Pilot, an AI-powered suite for human resources. Its functionality can be divided into three aspects: Answer and Summarize (Q&As, summaries), Create and Refine (generating job descriptions, performance reviews and knowledge base articles) and Automate and Nudge (report generation, automated scheduling, analytics and payroll). 

In 2023, Dayforce reported a profit of 35 cents per share, a 173% YOY improvement. Revenue is also up 21.5% YOY to $1.5 billion, with recurring revenue growing by 36.3%. 

The company’s 2024 guidance reflects this improvement. Revenue is expected to end somewhere around $1.73 billion — a 15% YOY increase. As a result, it’s no surprise that DAY stock has a consensus “strong buy” rating from 16 analysts.

On the date of publication, Rick Orford held a long position in NOW. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. 

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.