Unless you’ve been off the grid for most of 2023, you know that artificial intelligence is the newest thing for investors. For investing in AI stocks, two of the biggest names that come to mind are Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT).
The reason is advances in generative AI. Through its partnership with OpenAI, Microsoft released ChatGPT. Google released Bard in response. These two companies will be battling it out in this space for years to come.
But that leaves other opportunities fof investing in AI stocks. And this article looks at three stocks that could overtake Google and Microsoft in the artificial intelligence sector.
Each of these stocks have the potential to grow their market share and revenue in this space. The ultimate payoff may be years away, but the sheer size of this opportunity makes now an ideal time for speculative investors to look for the best AI stocks to buy.
| AI | C3.ai | $27.99 |
| PLTR | Palantir | $12.73 |
| NVDA | Nvidia | $386.48 |
C3.ai (AI)
When you’re looking for AI stocks to buy, C3.ai (NYSE:AI) is one of the first names to consider.
As the company’s name suggests, this is a pure play on artificial intelligence. The company provides a series of turnkey enterprise AI applications.
It’s growing an impressive list of clients in a variety of sectors. Not to mention that the company has an existing partnership with Microsoft.
This is why the company has drawn the attention of institutional investors. And that is fueling the stock’s meteoric rise.
AI stock is up 148% in 2023 as of May 24. And about 55% of that growth was before a recent short squeeze caused when the company unexpectedly raised its full-year guidance two weeks before its earnings report.
In the short term investors may want to exercise patience. The recent surge has pushed AI stock well above analysts’ estimates. However, those estimates may go up after the company reports earnings on May 31. The company isn’t profitable yet and that may serve as an anchor on the stock for some time.
Palantir (PLTR)
In early May, Palantir (NYSE:PLTR) stock shot higher after the company delivered its second consecutive quarter of positive earnings.
On the company’s earnings call, CEO Alex Karp sounded a bullish tone for full-year profitability. And although AI isn’t showing up in the company’s revenue numbers yet, Karp believes that it will only be a matter of time.
According to Karp, demand for the company’s Artificial Intelligence Platform (AIP) is “unprecedented.” He also said that company executives firmly believe that Palantir has a significant lead in AI that is being overlooked.
That may be true. It wouldn’t be the first time that Karp has made pronouncements that aren’t immediately present in the company’s financials.
The company is showing that its AI platform is being used in real-time battlefield conditions in Ukraine. And If it can match that with other wins on the commercial side of the business, PLTR stock may finally be ready to deliver on its promise.
Nvidia (NVDA)
In 2021, Nvidia (NASDAQ:NVDA) was one of the hottest names as there was an insatiable appetite for chips for PCs and gaming systems. But NVDA stock gave up all those gains and more as the market collapsed in 2022.
Enter AI. Artificial intelligence has given Nvidia new life. The company already lays claim to the most powerful graphic processing units (GPUs) that are needed for AI. And there are rumors percolating that Nvidia will get into generative AI and supercomputing cloud services.
And for investors who were slow to get in on NVDA stock, this may be the last best chance to get in on a stock. But it will require conviction. NVDA stock is trading near its 52-week high and has a price-to-earnings (P/E) ratio of over 176x.
With all that said, the company is becoming a cash generating machine, with free cash flow of at least $3 billion in each of the last four years. Combine that with the possibilities for AI and you can see why Nvidia is a name to consider when investing in AI stocks. While shares of Nvidia are far from cheap they may still offer tremendous value.
On the date of publication, Chris Markoch had a long position in PLTR. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.