Top 5 AI Stocks to Buy Now
Source: fool.com
AI Stocks to Consider
Artificial intelligence is rapidly changing the world, presenting a potentially once-in-a-generation investment opportunity. Here are five leading AI stocks to consider.
Palantir Technologies
Palantir Technologies is emerging as a compelling AI growth story. Its AI platform (AIP) helps organizations apply AI to solve real-world problems by gathering data and structuring it into an "ontology," mapping digital assets to real-world objects and processes. AIP is used for optimizing supply chains, automating underwriting, and monitoring for sepsis in hospitals. Palantir's growth is powered by the U.S. public sector, and it has a massive opportunity across industries. Palantir has introduced AI agents within AIP that take action, potentially driving growth. While the stock isn't cheap and government budget cuts could impact growth, Palantir's technology is unmatched, positioning it as a long-term AI leader.
Nvidia
Nvidia is a top investment choice for the AI infrastructure boom. Its graphics processing units (GPUs) are the backbone of AI data centers due to their parallel processing capabilities. Demand for GPUs is soaring as organizations build and run AI models and apps. Nvidia's CUDA software platform enhances its GPUs' performance for AI workloads. The tight integration between its GPUs and CUDA helped Nvidia attain over 90% of the GPU market share in Q1. Its new Blackwell chips are ramping up quickly, and demand for its AI "factories" is surging. Nvidia is gaining traction in the automotive space, with revenue expected to hit $5 billion this year. While a slowdown in AI spending is a risk, Nvidia is well-positioned to benefit from AI infrastructure development.
Advanced Micro Devices
While trailing Nvidia in the GPU space, Advanced Micro Devices (AMD) is carving out a niche in AI infrastructure, especially in inference. AMD said that one of the largest AI model companies is using its chips for a significant portion of its daily inference traffic. The AI inference market is expected to become much larger than training over time. AMD has also become a leader in data center central processing units (CPUs), steadily gaining share. The biggest risk for AMD is that it will always play second fiddle to Nvidia, or that AI infrastructure spending slows. But if inference spending takes off and AMD can grab some share, its stock should have a lot of upsides.
Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing (TSMC) benefits from the AI infrastructure boom as the world's leading semiconductor contract manufacturer, producing advanced chips like GPUs. TSMC leads in advanced nodes and packaging. With rivals Intel and Samsung struggling, TSMC is the go-to partner for top chip designers, giving it strong pricing power and making it integral to the semiconductor supply chain. TSMC is expanding capacity to meet the high demand for AI chips. The biggest risk is a slowdown in AI infrastructure spending, which could hit both revenue and fab utilization. However, given how tight advanced-node capacity is today, that risk seems manageable.
Alphabet
Alphabet faces questions about AI disrupting its search business. Alphabet said its search queries continue to grow, with Q1 search revenue climbing 10%. Its new AI-powered search tools are focused on monetizing commercial queries. Features like Shop by AI and virtual try-ons capture purchase intent in an AI world. With adtech experience and distribution through Android and Chrome, Alphabet is still in the driver's seat. Alphabet is seeing strong growth in its cloud computing business, Google Cloud, as customers build AI models and apps through its Vertex AI platform and run them on its data center infrastructure. The company has also taken the lead in autonomous driving through its Waymo robotaxi business, which is expanding throughout the U.S. Risks remain around government regulation and AI competition, but the stock is cheap for a company with so many growth levers.