I recently pointed out that today’s stock market is too good for investors to waste time with poorly rated stocks. A bull market (and that’s what we have right now) is the ideal time to jump on the train and capitalize with the best A-rated stocks to buy.
While electric vehicles are trailing the pack, today’s stock market is being powered by the potential of artificial intelligence. Specifically, the relatively new advances in generative AI, which is AI that requires creativity and innovation to produce original content that sounds like it was written by a human.
According to Allied Market Research, the generative AI field created $1.7 billion in revenue in 2022 and is expected to generate $21.5 billion annually by 2032.
That projected growth has many companies leaning into generative AI, leading to some market-leading returns that are among the best A-rated stocks to buy
We’re using the Portfolio Grader to select the A-rated stocks to buy for this month based on earnings performance, growth, momentum, and analyst sentiment.
Nvidia (NVDA)
There are no surprises here that. Nvidia (NASDAQ:NVDA) tops this list of A-rated stocks to buy, just as it led the S&P 500 in 2023. Nvidia was the best-performing stock on the index, gaining 239% on the year.
Nivida dominates the market in generative AI chips with a market share of nearly 90%. Generative AI relies on extensive computing resources. Nvidia’s H100 was the answer for much of 2023, but now Nvidia is rolling out the H200, which has 1.4x more memory bandwidth and 1.8x more memory capacity.
That’s why Nvidia’s earnings have been ridiculously good lately – earnings for the company’s fiscal fourth quarter of 2024 included revenue of $22.1 billion, up 265% from a year ago.
For the full fiscal year 2024, Nvidia had $60.9 billion in revenue, up 126% from a year ago. Net income of $29.7 billion was a 581% increase from fiscal 2023.
Nvidia is already off to the races in 2024, up 79%. It gets an “A” rating in the Portfolio Grader.
Advanced Micro Devices (AMD)
Nvidia competitor Advanced Micro Devices (NASDAQ:AMD) was left in the proverbial dust in 2023, but today it’s another of the best A-rated stocks to buy.
While Nvidia saw amazing growth, AMD struggled to catch up and investors were probably disappointed by the 125% gain (which pretty much any other industry would be doing cartwheels over).
Much of AMD’s gains came late in the year as the company drew closer to rolling out its own powerful chips that can handle generative AI. AMD’s MI300 processors could bring in $3.5 billion in revenue in 2024. It’s possible that AMD will revise that number higher as the year progresses.
AMD reported revenue of $6.1 billion in the fourth quarter of 2023, an increase of 10% from a year ago. Look for the MI300 sales to start beefing that number up as 2024 rolls on.
AMD stock is up 42% in 2024 and gets an “A” rating in the Portfolio Grader.
Palantir Technologies (PLTR)
Palantir Technologies (NASDAQ:PLTR) is another play on generative AI growth.
Palantir has been largely a government contractor that uses AI to help the military analyze situations and manage the data it receives. Its Gotham platform provides real-time analysis and information to defense and intelligence agencies.
Meanwhile, Palantir is expanding its commercial products through its Foundry platform, which provides insights and analysis for the private sector. Both defense customers and commercial clients can use its Artificial Intelligence Platform.
The potential of these products is leading to rapid growth. PLTR recorded revenue in the fourth quarter of $608 million, up 20% from a year ago. Income of $93 million was a 15% improvement on last year.
The company’s commercial side is nearly as lucrative as its government contracts, with $324 million in Q4 coming from government contracts and $284 million coming from commercial clients. Notably, commercial revenue grew by 32% in the quarter while government revenue grew by 5%.
Growing out the commercial platforms will lead to massive growth for Palantir this year. The stock is up 52% so far in 2024 and gets an “A” rating in the Portfolio Grader.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is the company that’s responsible for bringing generative AI to the masses. Its $13 billion partnership with OpenAI, the creator of ChatGPT, was the first sign for many of how generative AI could change the world.
Microsoft incorporated AI into many of its products, including its Office 365 platform and its Bing search engine and Edge browser. It’s also adding AI features to existing Windows apps and into Microsoft Copilot for Finance, among others.
The stock’s growth pushed its market capitalization to the $3 trillion mark and made Microsoft the biggest company in the world (although I wouldn’t be surprised if Nvidia caught it in the next couple of years).
Revenue in the second quarter of fiscal 2024 was $62 billion, up 18% from a year ago. Net income was up 33% to $21.9 billion, and earnings per share were up 33% to $2.93 per share.
MSFT stock is up 57% in the last 12 months, and it gets an “A” rating in the Portfolio Grader.
Meta Platforms (META)
Formerly known as Facebook, Meta Platforms (NASDAQ:META) is in the middle of a great turnaround. The stock is showing a fivefold increase since hitting its 2022 lows and all signs point to greater gains ahead in 2024.
Meta’s CEO, Mark Zuckerberg, made 2023 a “year of efficiency” and cut payroll and expenses following a rough 2022. It also shifted its focus from its incredibly expensive metaverse plans and refocused on generative AI.
That bet paid off. Meta’s revenue was $40.1 billion in the fourth quarter, up 25% from the previous quarter. Much of that growth was because of advertising income, which jumped from $31.2 billion last year to $38.7 billion in Q4 2023.
Net income of $14 billion was 201% better than the fourth quarter of 2022. EPS was also up big, climbing to $5.33 per share from $1.76 per share a year ago.
META stock is up 40% so far in 2024 and gets an “A” rating in the Portfolio Grader.
Marathon Digital (MARA)
Marathon Digital (NASDAQ:MARA) is a Bitcoin (BTC-USD) miner that produces an average of 28.7 Bitcoin per day. In February, Marathon mined 833 Bitcoin, up 22% from a year ago.
The price of Bitcoin is close to $67,000 today, eclipsing its 2021 high. Marathon currently holds 16,930 BTC as assets at a market price of more than $1.1 billion. And its profits continue to go up as Bitcoin’s price is inflated.
If you aren’t interested in owning Bitcoin yourself, Marathon Digital is an excellent proxy and perhaps a superior choice to Bitcoin exchange-traded funds.
MARA stock is up 252% in the last 12 months and gets an “A” rating in the Portfolio Grader.
Super Micro Computer (SMCI)
Super Micro Computer (NASDAQ:SMCI) is a California company that develops and manufactures computer server and storage solutions.
Its server housing units have proven to be ideal for companies that are using Nvidia’s AI chips to power their generative AI applications.
The company is seeing gains that are even better than Nvidia’s. SCMI stock is up 730% in the last year, including a 295% gain so far in 2024.
Bank of America analyst Ruplu Battacharya recently initiated coverage of SMCI stock with a “buy” rating, saying that the company “will be a beneficiary of AI-driven demand growth (>50% of revenues now tied to accelerators like GPUs).”
Battacharya estimates that the AI server market will expand at a 50% compound annual growth rate in the next three years.
SMCI’s revenue was $3.66 billion in the second quarter of fiscal 2024 (ending Dec. 31, 2023), up from $1.8 billion a year ago. Profits of $564 million were better than $337 million in the same quarter a year ago.
SMCI stock has plenty of room to run. The Portfolio Grader gives it an “A” rating.
On the date of publication, Louis Navellier had long positions in NVDA, PLTR, MSFT and SCMI. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article had long positions in NVDA, PLTR and BTC-USD. The staff member did not hold (either directly or indirectly) any other positions in the securities mentioned in this article.
