If an investor were limited to purchasing a single AI stock investment, any of the 3 in this article would offer a strong chance at significant returns. Investors have seen the power of AI and the potential of the technology to transform business. The efficiency gains it offers are already producing value across enterprise. Those efficiency gains are only expected to increase which makes stocks in the sector remain attractive.
Investors have grown somewhat skeptical of the big names in AI given how dramatically their shares have increased in price. However, I believe those fears are overblown. As strange as it may sound, there’s likely a lot more upside remaining given how concentrated power is within the sector. If you only have enough money to make a single AI stock investment, consider one of these companies.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) has been in the driver’s seat for the better part of 2023 in relation to AI and its stock. It wasn’t long after the firm announced an additional $10 billion investment into OpenAI that its shares began to take off.
The ChatGPT connection has served it well. Generative AI has been the story of 2023 and ChatGPT is a major force in the sector. That investment set Microsoft apart from the get-go. Google (NASDAQ:GOOGL, NASDAQ:GOOG) took a long time to even announce competitor products and failed in marketing them the first go-round.
More recently, Microsoft announced that it will sell its Copilot AI tool for an additional $30 for Microsoft 365 customers. It is something of a shift from AI hype that surrounded ChatGPT to tangible sales as AI bundles will spike revenues for the firm. That’s pretty important for things like share valuation. The rubber is really beginning to hit the road for Microsft in relation to AI.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) stock continues to be an obvious choice for investors seeking quick AI-based returns. The shares have shown again and again in 2023 that they won’t be held in check by skepticism and fear.
That skepticism and fear was evident when Nvidia forecast $11 billion in Q2 sales for the second quarter. It was such a drastic jump from the $7 billion Wall Street had previously been expecting that it sent share prices from $300 to $380 instantaneously. Shares had already doubled in 2023 to reach the $300 mark. So, once they reached $380 the skeptics’ voices became louder.
That didn’t phase bullish investors who continued to buy which has sent shares above $450. It’s hardly the limit based on Wall Street bulls who expect shares to rise above $750 in the future.
Nvidia dominates the AI market at the moment and has, at times, been unable to meet demand. That’s a perfect recipe for spiking product prices and sending share prices higher as a result.
Advanced Micro Devices (AMD)
Avanced Micro Devices (NASDAQ:AMD) is the dark horse in the fight for AI stock leadership. It’s clearly behind Nvidia in terms of competitive strength and demand.
That’s evident from the fact that AMD shares haven’t yet doubled in 2023 while NVDA shares have tripled.
That difference in returns is also indicative of an opportunity for AMD investors. Its AI chips aren’t that far behind those from Nvidia. MosaicML recently tested each firm’s second-best chips measuring their AI prowess. The results showed that AMD’s AI chips were roughly 80% as powerful as those from Nvidia.
What’s more, AMD has particular machine learning strengths in software which MosaicML pointed out as being a real bugaboo for many AI chip firms. As a result, the firm was confident that AMD could ultimately catch Nvidia in AI chip performance. Given that notion, it’s easy to see why AMD shares offer so much upside because they haven’t yet taken off to the same degree as other AI leaders this year. Its dark horse status could really lead to massive gains in the near future.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
