Sam Altman returning as CEO of Open AI this past week has refocused many investors on the sector. With so many eyes on how this industry leader will continue to move on and expand after this drama, we wanted to reassess the top AI stocks for December.
Artificial intelligence has implications in industries like robotics, data analytics and even art. Just this past year, the AI market was valued at an enormous market value of $136 billion and shows no signs of slowing down. Analysts project that its growth will continue skyrocketing by an immense compound annual growth rate of 19% from 2023 to 2030. This surge in growth is largely attributed to advancements in industry verticals, allowing for seamless transitions that aid in all aspects, from efficiency to communication and data collection. Here are three of the best AI stocks to keep on your radar.
C3.ai (AI)
C3.ai (NYSE:AI) is a leading AI software company that seeks to scale AI to numerous industries. With generative AI and strong interest rates boosting this stock in the past year, analysts project an average 1-year price target of $28.
In November C3.ai signed a strategic partnership with Amazon (NASDAQ:AMZN) and its AWS division. Amazon has a large amount of resources, which should help boost the growth of the company in the coming months.
Looking at its financials, we see that C3.ai has had troubles with earnings in the past. However, most of the company’s free cash flow is going into heavy research in R&D. I believe this is a strategic investment to ensure future growth. While the stock has underperformed in the market, recent developments and a forward-looking focus on recurring revenues keep me optimistic. I think AI has the ability to capitalize off the boom in artificial intelligence.
Taiwan Semiconductor Manufacturing Company (TSM)
Established in 1987, Taiwan Semiconductor Manufacturing Company (NYSE:TSM) stands as a semiconductor industry powerhouse. TSMC’s semiconductor chips play a vital role across diverse applications, from advanced electronics to 5G technology. Positioned as a growth stock, analysts project an average one-year price of $113.
TSMC differentiates itself through its leadership in advanced semiconductor manufacturing. The company’s market share of 56.4% means that it has an overwhelmingly large presence in the global semiconductor foundry market. In the AI stocks domain, TSMC remains a key player, contributing to AI innovation through advanced chip manufacturing with unmatched expertise.
With a current P/E ratio of around 18.1x, TSMC aligns with industry standards. Over the last five years, the company exhibited robust EPS growth, boasting a CAGR of approximately 22.4%, surpassing its historical mean. TSMC’s resilient gross margins and impressive 18.3% year-over-year revenue growth underscore its financial stability. Pioneering advancements in semiconductor fabrication technology and maintaining a strong free cash flow position TSMC for sustained growth. In conclusion, TSMC’s commitment to innovation, unmatched market share and impressive financial performance make it a compelling choice for investors seeking a robust semiconductor and AI-focused stock in their portfolios.
UiPath (PATH)
UiPath (NYSE:PATH) is paving the way in robotic process automation (RPA) innovation and has transformed corporate processes. PATH sets itself apart from its competition with an outstanding 35.8% market share, with extensive services in the RPA area. Because of its market leadership, UiPath is in an excellent spot to thrive in the rapidly changing AI sector. As part of a recent strategic initiative, the company partnered with Microsoft (NASDAQ:MSFT) to improve its integration capabilities with Microsoft Azure.
Although the company’s earnings this year are not the best, the trajectory for future profitability. PATH is predicted to have positive free cash flow and operating cash flow, both of which are significantly higher than previous years. The company has also outperformed the RPA market average in recent years, showcasing excellent revenue growth of 24% this year. Driven by strong financial metrics, UiPath remains at the forefront of the automation revolution. In conclusion, UiPath is a tempting option for investors looking to gain exposure to the underrepresented AI automation business because of its dedication to strategic alliances and distinct market position.
On the date of publication, Ian Hartana and Vayun Chugh did not hold (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.
