Wall Street analysts are racing to tout the best artificial intelligence stocks amid a surge in investor interest. On company earnings calls, the number of times management mentions artificial intelligence has jumped. But if you're looking for the best AI stocks, it's a good time to be cautious amid the hype.
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In general, look for AI stocks that use artificial intelligence to improve products or gain a strategic edge. For example, Coca-Cola (KO) has launched its new AI-inspired "Masterpiece" advertising campaign.
Meanwhile, be on guard against poorly performing companies that suddenly call themselves leaders in AI technology.
Further, AI technology uses computer algorithms. The software programs aim to mimic the human ability to learn, interpret patterns and make predictions. The newest forms of AI generate content. There's also growing concern over AI's potential social, economic and security ramifications.
The top artificial intelligence stocks to buy span chipmakers, enterprise software companies and technology giants that utilize AI tools in many applications.
Shares in Nvidia (NVDA), the leading maker of AI chips, have surged in 2023. NVDA stock jumped on first-quarter earnings that topped estimates as well as a strong outlook.
NVDA forecast second-quarter revenue 50% higher than analyst estimates driven by strong generative AI demand in its data center business.
"For any investor calling this an AI bubble, we would point them to this Nvidia quarter and especially guidance," Wedbush analyst Daniel Ives said in a note to clients. "(It) cements our bullish thesis around AI and speaks to the 4th Industrial Revolution now on the doorstep with AI."
AI Stocks: OpenAI Emerges
Startup OpenAI's ChatGPT is only one of many "generative AI" technologies that could roil a host of industries by creating text, images, video and computer programming code on their own. Generative AI technology already is finding applications in marketing, advertising, drug development, video gaming, customer support and digital art.
Also, Microsoft (MSFT) continues to leverage its strategic stake in OpenAI as it aims to take on Google in internet search and office productivity tools. It's also forming closer ties with Nvidia.
Cloud computing giants Amazon.com (AMZN), Microsoft and Alphabet's (GOOGL) Google sell AI analytical services to business customers. With cloud revenue growth slowing, they're pouring money into artificial intelligence. Microsoft's Azure OpenAI customers now top 4,500, up 80% from 2,500 disclosed in mid-April.
"We believe hyperscalers such as Alphabet, Meta and Microsoft with large data (holdings), software expertise, and cloud infrastructure cost advantages, along with strategic 'picks and shovels' suppliers in the AI value chain like Nvidia and Amazon Web Services, are likely to be near-term beneficiaries of the shift to generative AI," William Blair analyst Ralph Schackart said in a recent note. "Longer-term beneficiaries are too early to call."
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Artificial Intelligence Stocks: Software Boom
One key to the rise of generative AI is improved natural language processing models that help computers understand the way that humans write and speak. OpenAI is part of a wave of NLP startups that includes AI21 Labs, Anthropic and Cohere. Anthropic has introduced a competitor to ChatGPT called "Claude."
Meanwhile, Anthropic on May 23 announced it has raised $450 million in a funding round led by Spark Capital. Google, Salesforce (CRM), Sound Ventures and Zoom Video Communications (ZM) took part in the funding.
As software companies integrate generative AI tools into products, their customers will spend more on software, analysts say. For example, TD Cowen recently estimated in a note to clients that generative AI software spending will boom from $1 billion in 2022 to $81 billion in 2027, representing a 190%, five-year compound annual growth rate.
AI Stocks Span Chips, Software
Investors should be cautious amid the AI hype, Solita Marcelli, UBS chief investment officer for the Americas, said in a recent note.
"Looking ahead, we see artificial intelligence as a broad horizontal technology that will impact every industry across every region of the global economy, driven by gains in computer power, systems development, but especially ever-growing amounts of data," she said. "We think companies that have invested in the infrastructure and operations to capture vast amounts of customer data are in the pole position."
Nvidia at its GTC conference announced a wide-ranging portfolio of AI products, including new graphics processing units, data center hardware, AI software models and AI as a service. NVDA stock belongs to IBD Leaderboard, IBD's curated list of leading stocks that stand out on technical and fundamental metrics.
Despite investments, Apple (AAPL) has lagged in chatbot technology.
For many companies, gaining an edge with AI requires ongoing investments in computing, networking and data center infrastructure.
Bank of America, Morgan Stanley and Barclays tout chipmaker Nvidia and Arista Networks (ANET) as top AI stocks. Internet data centers will need more computing power and network bandwidth to process AI workloads.
TD Cowen's top picks in AI stocks include Google, Microsoft and Nvidia.
Artificial Intelligence Venture Funding
Despite the banking crisis, venture capital is flowing to AI startups. Andreessen Horowitz led a $150 million funding round for Character.AI, which now has a valuation of over $1 billion.
Meanwhile, AI startup Adept recently raised $350 million and is also at a valuation of over $1 billion. Adept has studied how humans use computers — from browsing the internet to navigating a complex enterprise software tool — to build an AI model that can turn a text command into sets of actions.
AI usage is exploding in facial and voice recognition technology, medical diagnostics, algorithmic trading, and automated customer-service bots.
All AI software needs computing power to find patterns and make inferences from large quantities of data. And the race is on to build AI chips for data centers, self-driving cars, robotics, smartphones, drones and other devices.
Nvidia provides software development tools to build artificial intelligence applications. Rival Intel (INTC), meanwhile, aims to catch up.
Microsoft reportedly is working with Advanced Micro Devices (AMD) to develop AI chips. AMD has been ramping up AI initiatives.
Also, Nvidia faces more competition from AI chip startups Cerebras, Sambanova and Graphcore.
Tech Giants Among Best Artificial Intelligence Stocks
Meanwhile, tech giants are expanding AI initiatives.
In e-commerce, Amazon plans to add ChatGPT-style search to its online store.
Amazon for years has used AI to customize online retail offerings and recommend products to website visitors. The e-commerce behemoth also uses robotics and AI at its fulfillments centers.
Further, Amazon leverages AI in retail stores.
At the Google I/O 2023 developers event on May 10, Alphabet showcased how generative AI will be integrated into search, maps, Workspace, photos, cloud computing and Android devices. Also, Google plans to unveil more of its ad strategy amid the emergence of generative AI at Google Marketing Live on May 23.
AI tools are playing a big role in Facebook-parent Meta's (META) legacy business and new initiatives. As it moves into the metaverse, Meta said it has built a new artificial intelligence supercomputer. Called the AI Research Supercluster, the Meta computer uses chips from Nvidia.
Also, Meta on May 18 hosted an "AI infrastructure" event. Meta disclosed plans to build custom AI chips to be used in its data centers. The new Meta Training and Inference Accelerator, or MTIA, is due out in 2025.
Top AI Stocks: Software Market Upside
Venture capitalist Marc Andreessen once observed how "software is eating the world" by remaking industries through automation. In the same way, artificial intelligence is expected to modernize software.
The generative AI wars are heating up in marketing. Salesforce in Marchrolled out Einstein GPT, which adds OpenAI's features across its software platform. Pilot technology will be available first on its Slack messaging tools. Salesforce has used predictive AI tools since 2016.
Meanwhile, Adobe (ADBE) on March 21 unveiled generative artificial intelligence services for creative professionals and marketers. They include Adobe Firefly, a new family of creative generative AI models focused initially on image generation and text effects.
Software maker Atlassian (TEAM) announced "Atlassian Intelligence" at a recent user conference. It embeds OpenAI and large language model technology as a foundational element across all the company's cloud products.
Further, Bank of America upgraded Palantir (PLTR) to buy citing its AI prowess. But some analysts aren't sure Palantir will capitalize on the AI opportunity.
Amid a shortage in software engineers, low-code programming tools are making it easier for business units to develop AI applications. DataRobot is part of a new wave of AI startups bringing low-code tools to market.
Meanwhile, Snowflake (SNOW) and startups such as Databricks aim to shake up the database market with lightning-fast analysis of "unstructured data" gathered from sensors. One example would be streaming video.
In addition, Databricks announced new contributions to multiple open-source projects at its recent AI Summit.
IT Services Firms Make Acquisitions
Still, corporate adoption of AI technologies is nascent. The majority of organizations are still experimenting with AI technology, said an Accenture (ACN) study.
Artificial intelligence stocks to watch include information technology services firms such as IBM, Accenture, and Epam Systems (EPAM).
Not every effort succeeds. IBM sold off Watson Health to private equity firm Francisco Partners. Amid the rise of generative AI, IBM aims to rebound with Watson Code Assistant.
Meanwhile, IBM continues to acquire artificial intelligence companies, including Databand.ai, Turbonomic, ReaQta, MyInvenio and WDG Automation.
Also, Accenture also has been a big buyer of AI startups.
Follow Reinhardt Krause on Twitter@reinhardtk_techfor updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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FAQs
What is the prediction for NVIDIA stock? ›
NVIDIA Corp (NASDAQ:NVDA)
The 41 analysts offering 12-month price forecasts for NVIDIA Corp have a median target of 450.00, with a high estimate of 600.00 and a low estimate of 175.00. The median estimate represents a +18.47% increase from the last price of 379.84.
The NVIDIA stock 5-year forecast from AI Pickup was bearish, with the website's technical analysis, predicting that the share price could average $42.42 in 2027, down from $117.89 in 2022, $106.73 in 2023 and $78.82 in 2025.
What is the stock price prediction for NVIDIA in 2025? ›According to the latest long-term forecast, Nvidia price will hit $450 by the end of 2023 and then $600 by the end of 2024. Nvidia will rise to $800 within the year of 2025, $1000 in 2026, $1200 in 2027, $1300 in 2028, $1500 in 2029, $1600 in 2031, $1700 in 2032 and $1800 in 2033.
Is NVIDIA a buy sell or hold? ›Nvidia's analyst rating consensus is a Strong Buy. This is based on the ratings of 37 Wall Streets Analysts.
Will Nvidia stock reach $1 000? ›According to the latest long-term forecast, retrieved on March 2, Nvidia's price will climb above $1,000 in 2028.
What is the stock price forecast for NVDA in 2024? ›That changed with today's reporting, and where analysts estimated a revenue outlook for NVIDIA's Q2 2024 of around $7.2 billion USD, NVIDIA instead forecasted a revenue of $11 billion, more than 50 percent over expectations. NVIDIA (NVDA) stock value rose sharply following a strong outlook for revenue in Q2 2024.
Will Nvidia be a trillion dollar company? ›Nvidia Corp stock has soared about 26 percent, taking it closer to a market value of $1 trillion after the chip designer's stellar revenue forecast showed that Wall Street has yet to price in the game-changing potential of artificial intelligence.
What will Amazon stock be worth in 2025? ›| Year | Prediction | Change |
|---|---|---|
| 2025 | $ 183.85 | 60.35% |
| 2026 | $ 232.80 | 103.04% |
| 2027 | $ 294.79 | 157.11% |
| 2028 | $ 373.29 | 225.57% |
The GeForce RTX 2050 Mobile is a mobile graphics chip by NVIDIA, launched on December 17th, 2021.
Where will NVDA be in 10 years? ›Nvidia is set for terrific growth over the next 10 years
Analysts are expecting a turnaround in the company's fortunes in the current fiscal year, forecasting an 11% increase in revenue. Nvidia is projected to deliver stronger revenue growth of 24% in fiscal 2025, generating $37 billion.
Is Nvidia still a buy? ›
Analysts: Nvidia stock is still a buy. Long-time followers of Nvidia stock probably already know that it happens to be one of the best stocks of the past 30 years.
What is the Nvidia prediction for 2030? ›According to the Traders Union long-term price forecast Nvidia (NVDA) can reach $1254.1 by 2025, $6407.31 by 2030, $11020.87 by 2034.
Is Nvidia good stock for future? ›Nvidia currently has an average brokerage recommendation (ABR) of 1.48, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 32 brokerage firms. An ABR of 1.48 approximates between Strong Buy and Buy.
Is Nvidia buying back shares? ›SANTA CLARA, CA -- NVIDIA today announced that it will return $1 billion this fiscal year to shareholders in the form of stock buybacks and dividend payments, including $100 million in stock being repurchased this quarter.
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NVIDIA (NVDA) Stock Price Predictions
The average share price is expected to remain over $500 in 2025, and the NVDA price may soar to a maximum of $900 in 2030, according to market experts' projections. NVIDIA stock forecasts will now be examined.
Some analysts believe that Nvidia is grossly overvalued considering that its total revenue in 2022 came in at $26.9 billion while its net income was just $4.3 billion. The latest estimate, as shown below, are that the company's revenue will be $30.1 billion this year and $100 billion in 2032.
What is NVDA highest stock price? ›- The all-time high NVIDIA stock closing price was 333.36 on November 29, 2021.
- The NVIDIA 52-week high stock price is 318.28, which is 4.2% above the current share price.
- The NVIDIA 52-week low stock price is 108.13, which is 64.6% below the current share price.
| Year | Minimum Price | Maximum Price |
|---|---|---|
| 2035 | $258.8 | $321.8 |
| 2040 | $284.68 | $347.68 |
| 2045 | $313.15 | $376.15 |
| 2050 | $344.47 | $407.47 |
High Dividend: NVDA's dividend (0.056%) is low compared to the top 25% of dividend payers in the US market (5.25%).
What is meta price target for 2024? ›
In 2024, Meta (FB) stock is expected to perform well. According to price forecast, By the end of the year, Meta (FB) stock will reach a maximum price of $384.046.
Does NVIDIA have a lot of debt? ›NVIDIA long term debt for 2023 was $9.703B, a 11.36% decline from 2022. NVIDIA long term debt for 2022 was $10.946B, a 83.53% increase from 2021.
Who owns the most NVIDIA stock? ›The top individual shareholders of Nvidia are Jen-Hsun ("Jensen") Huang, Colette M. Kress, and Mark A. Stevens, and the top institutional shareholders are Vanguard Group Inc., BlackRock Inc. (BLK), and FMR LLC.
Where does NVIDIA make the most money? ›NVIDIA generated almost $27 billion in revenue in 2023, of which $15 billion came from computing and networking and $11 billion from graphics. Opposite to 2022, where of $27 billion in revenue, over $15.8 billion came from Graphics and $11 billion from computing and networking.
How high will Amazon be in 5 years? ›Amazon Stock Could Be Worth $3 Trillion in 5 Years | The Motley Fool.
Could Amazon stock reach $10,000? ›Amazon at $10,000 might seem like a pie-in-the-sky number, but it would be right in line with how investors have always valued the company. As long as AWS keeps growing by close to 30%, Amazon at $10,000 by 2025 becomes a very achievable target over the next four years.
What will AMZN stock be worth in 2030? ›The most cautious estimate we have puts the value of an Amazon share at $6,865 by the middle of 2030. There is a chance that by the year 2030, AMZN shares will be worth $530. The price of Amazon (AMZN) shares is projected to rise to $520 by the year 2030.
How big can Nvidia become? ›NVDA Stock Is on the Way to a Trillion-Dollar Market Cap
Nvidia's end-to-end computing services, such as the Drive platform for autonomous self-driving vehicles, could be worth $2.1 trillion by 2030.
Analysts expect Nvidia earnings to rebound 34.3% in fiscal 2024, on a 10.8% sales increase. Out of 47 analysts covering NVDA stock, 32 rate it a buy.
What is next Nvidia? ›The Nvidia GeForce RTX 4080 was unveiled on September 20 and began shipping on November 2022 from third-party manufacturers like Asus, Gigabyte, PNY and more. It launched with a $1,199 price tag, which is still its current price. For that, you'll get 9,728 CUDA cores and 16GB of onboard memory.
What was NVIDIA returns last 10 years? ›
Definition of 10 Year Price Total Return
Ten Year Stock Price Total Return for NVIDIA is calculated as follows: Last Close Price [ 301.78 ] / Adj Prior Close Price [ 3.45 ] (-) 1 (=) Total Return [ 8,636.1% ] Prior price dividend adjustment factor is 0.93.
...
2 How NVIDIA Corporation (NVDA) Stock Performed Against The Entire Stock Market.
| Company Name | 10-Year Return (%) |
|---|---|
| NVIDIA Corporation (NVDA) | 57.61% |
| NASDAQ (IXIC) | 12.84% |
NVDA' has a weak valuation at its current share price on account of a overvalued PEG ratio despite strong growth. NVDA's PE and PEG are worse than the market average leading to a below average valuation score. Click Here to get the full Report on NVIDIA Corporation (NVDA) stock.
Why is NVIDIA stock failing? ›Key Points. Weak sales of graphics cards have led to an inventory pile-up at Nvidia. The graphics specialist's margins and earnings have taken a hit thanks to rising inventory levels. Nvidia may find it challenging to clear graphics card inventories, as a weak PC market is expected to persist in 2023.
Why did NVIDIA stock Skyrocket? ›The results were driven by surging demand for the processors that power artificial intelligence (AI) applications. Nvidia's data center revenue (which includes AI chips), climbed 14% year over year to a new record, while increasing 18% since last quarter.
Is Nvidia 2050 good? ›The Nvidia GeForce RTX 2050 is not a powerful graphics card for deep learning. It is considered a budget or entry-level GPU, and may not have the performance or memory capacity necessary to handle more complex deep learning models.
What will Meta stock be worth in 2030? ›Long-term projections have Meta at $272 by the end of 2022 and $360 by the end of 2023. Meta stock will hit $470 in 2025, $580 in 2027, and $765 in 2030, with further gains expected thereafter.
What will Microsoft stock be worth in 2030? ›| Year | Prediction | Change |
|---|---|---|
| 2027 | $ 749.60 | 138.96% |
| 2028 | $ 931.99 | 197.10% |
| 2029 | $ 1,158.75 | 269.38% |
| 2030 | $ 1,440.69 | 359.26% |
NVIDIA Investment Opportunity
NVIDIA has a volatility of 2.11 and is 2.34 times more volatile than NYSE Composite. 18 of all equities and portfolios are less risky than NVIDIA.
Nvidia: What's the difference? The most basic difference between AMD GPUs and Nvidia GPUs is that Nvidia chips tend to be more powerful, especially at the high-end, while AMD cards offer better value at lower price points and a more friendly user interface.
Why is Nvidia dividend so low? ›
That sky-high valuation is another reason Nvidia offers such a paltry dividend yield. The company trades at such a premium price that it must continue growing rapidly to justify its valuation. If it slows down, shares could significantly underperform from here.
What is Nvidia projected revenue 2023? ›"We had to place additional orders, and we procured substantially more supply for the second half" of 2023. Nvidia forecast current-quarter revenue of $11 billion, plus or minus 2%. Analysts polled by Refinitiv had forecast revenue of $7.15 billion.
Is Nvidia stock a long term buy? ›For long-term investors, Nvidia still looks like a good option, but you may want to consider dollar-cost averaging into the stock to cushion a potential pullback in its price. Expect a big swing from the stock when Nvidia reports earnings on May 24, even as analysts expect revenue and profits to decline once again.
Is Nvidia a good stock to buy long term? ›At 155 times trailing earnings, Nvidia is richly valued. The price-to-sales ratio of 25 further tells us how expensive Nvidia stock is right now following its tremendous rally in 2023. But a forward price-to-earnings ratio of 60 highlights a huge improvement in the bottom line.
Is Nvidia a good stock to buy 2023? ›The update showed that the data center and gaming segments are both back in solid growth mode for Nvidia. With the additional growth expected from its AI platform, Nvidia looks to be a stock to own even after a big run in 2023.
What to expect from Nvidia earnings? ›NVIDIA's outlook for the second quarter of fiscal 2024 is as follows: Revenue is expected to be $11.00 billion, plus or minus 2%. GAAP and non-GAAP gross margins are expected to be 68.6% and 70.0%, respectively, plus or minus 50 basis points.
What will Google stock be worth in 2040? ›Google Stock Price Prediction 2040 | Google Stock Forecast 2040. Our latest forecast suggests that the average value of GOOGL stock could reach around $324.36 by the end of 2040. If the market experiences any bullish events, the maximum value of GOOGL stock could reach as high as $560 by the end of the year.
Where will Microsoft stock be in 5 years? ›According to price forecasts, the maximum price of Microsoft stock in five years could reach anywhere from $628.37 to $685.72 if current growth trends continue.
Will Microsoft stock reach $500? ›Well, our forecast data shows MSFT is likely to hit the $500 in 2025. This may happen towards the end of the year, so the projected price for mid-2025 is $461. The Microsoft stock will then rise significantly to $506 by the end of the year.
What will Amazon stock be worth in 2050? ›| Year | Price in the middle of the year | Price at the end of the year |
|---|---|---|
| 2034 | $299.54 | $307.53 |
| 2035 | $315.42 | $322.96 |
| 2040 | $382.34 | $391.09 |
| 2050 | $524.74 | $532.52 |
Will Apple stock reach $500? ›
Achieving $500 will probably take longer than 12 months, possibly around five years if Apple maintains its robust median annual return of 24% since the early 1980s. Potential catalysts for reaching $500 include macroeconomic improvements and disruptive innovations like mixed reality or autonomous vehicles.
What will Apple stock be worth in 20 years? ›It was projected that Apple's share price would reach $220 by the end of 2023, $250 in 2024, $315 in 2025, $370 in 2026, $425 in 2027, $465 in 2028, and $480 in 2029. In 2030, analysts anticipate Apple shares will be worth $510. We will now talk about the future of the stock price.