Dividend Stocks

3 Stocks to Buy for the AI Revolution

Investors seek top AI stocks to capitalize on the growing reliance various industries are seeing with respect to artificial intelligence. This revolution creates ample growth opportunities across industries, demanding vigilance from savvy investors.

Of course, not all AI stocks are equal. Some provide true innovation, supporting long-term growth trends that can last. Others are simply riding this mania higher, and may not have what it takes to survive another market downturn.

AI enterprises truly advancing technology exist. They revolutionize industries with their innovative solutions. Their success stems from deep research, patents, and exclusive AI applications. Unlike others, they focus on long-term growth trends. They don’t get swayed by the hyped AI buzz. They excel by predicting and adjusting to constant AI shifts. Importantly, they turn their insights into scalable services and products.

Here are three leading AI stocks I think are worth buying, whether this AI mania continues or not.

Nvidia (NVDA)

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Nvidia (NASDAQ:NVDA) is the latest company to join the trillion-dollar club amid this AI-related hysteria. 

On May 25, Nvidia’s shares saw a massive surge. This surge resulted from investor excitement for AI. The Q1 2024 earnings call had CFO Colette Kress speak. She highlighted the company’s expected growth. This comes as data centers start using Nvidia’s AI-integrated products. The market recognizes Nvidia’s AI potential, leading to an optimistic outlook. Recently, this momentum has maintained. It’s driving the stock to record-breaking highs.

Of course, Nvidia’s growth prospects are fueled by the advent of artificial intelligence. While other sectors contribute to its growth, AI is what investors care about right now. It’s this exposure that many believe will spark a new period of accelerated expansion for Nvidia.

Nvidia’s value has surged by over 160% in 2023, positioning it for a potential fifth consecutive year of 100%+ growth since 2016. The company’s trajectory appears to be driven by market trends rather than underlying fundamentals. With the ongoing AI boom and a favorable tech market, Nvidia’s shares have the potential to rapidly approach that threshold.

Microsoft (MSFT)

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Microsoft’s (NASDAQ:MSFT) venture and financial commitment to AI are well-established on Wall Street. Microsoft has introduced Bing, now powered by ChatGPT. The goal is clear: compete with Google. In the first-quarter earnings call, the mention of AI was frequent. This signals Microsoft’s serious investment in this field. Consequently, institutional investors are noticing. They’re closely watching Microsoft’s AI initiatives.

As of May 18, institutional investors have added 224 new positions in Microsoft stock, while 108 positions were sold out, reflecting favorable sentiment towards the stock.

The bigger picture is that with a market capitalization of $2.3 trillion, Microsoft is a top contender and close rival to Apple. Boasting powerful brands such as Windows, Office, Xbox, and LinkedIn, the company has secured prominent positions in lucrative industries. This dominance has fueled consistent stock growth, with its shares surging by over 800% in the past decade.

Microsoft’s stock has been a consistent performer, offering reliable gains to investors. With ongoing developments in various areas of its robust business, the stock continues to attract attention. Considering Microsoft’s track record of past growth and its promising prospects in AI and gaming, it presents an enticing opportunity for investors to buy, hold, or sell.

C3.ai (AI)

Source: shutterstock.com/Andrey Suslov

C3.ai (NASDAQ:AI), originally focused on the energy industry, now primarily operates as a defense contractor. Its founder, Thomas Siebel, has a successful track record with Siebel Systems and significant personal wealth. Given its defense contracts, C3.AI has drawn comparisons to Palantir (NYSE:PLTR).

C3.ai stock soared as it announced strong preliminary results for its Q4, surpassing expectations and resolving a short-seller investigation with no wrongdoing found. In a significant development, the company made its generative AI product suite accessible to the public through Google Cloud Marketplace.

Furthermore, C3.ai is scheduled to announce its earnings for the April quarter on May 31. Analysts anticipate revenue of approximately $71 million and a loss of 17 cents per share. While the company achieved a 36% revenue growth in fiscal 2022, it experienced a significant loss of nearly $193 million due to a substantial increase in selling and administration expenses.

On the date of publication, Chris MacDonald has a position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.