This week it was reported that NVIDIA has surpassed Microsoft as the world’s most valuable company, thanks to its AI offerings which have seen it almost triple its stock this past year. For investors looking to invest in AI technologies, there are plenty of opportunities to capitalize on AI’s rapid growth. Even if you choose not to invest in AI stocks for your portfolio, these companies’ success is likely to impact the businesses you are monitoring. So, which are the best AI stocks for 2024?
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“In 2024, the landscape of AI stocks presents intriguing opportunities for investors,” says Matt Weller, head of market research at City Index. “Companies at the forefront of artificial intelligence, such as Nvidia and Altair Engineering, are worth watching closely. These firms have demonstrated exceptional innovation and a strategic vision that aligns with the evolving demands of the market.
But which companies are actually driving the trend and not following it? The stock market experts at City Index have shared the five best AI stocks to watch in 2024.
Five best AI stocks for 2024
1. Nvidia (NVDA)
Nvidia had a record year in 2023, profiting from the boom of OpenAI’s large language model software, ChatGPT. The company’s graphics cards are some of the most valuable semiconductors available, partly driving Nvidia’s valuation past $1 trillion last year, which has now surpassed $3.34 trillion as of June 2024. Competitors such as AMD and Intel are worth only a fraction of that figure, leaving Nvidia head and shoulders above its competition in 2024.
2. Altair Engineering (ALTR)
The company posted strong revenue figures in 2023—a 12.3% increase YoY—and nearly tripled its free cash flow from $5.2 to $14.7 million. The future looks bright for the company, as it also released its updated AI-powered data analytics tool, RapidMiner, in November 2023.
3. C3.ai (AI)
C3.ai’s stock price fell from last year’s high of $44.49 to under $30 at the start of 2024. Analysts’ projections place C3.ai’s revenue to grow by 19.8% this year and 23.6% in 2025, up from 14.7% in 2023. However, the stock isn’t expected to reach profitability until the end of its 2025 fiscal year. It’s now a question of whether or not to bet on the cloud software provider’s potential upside. C3.aihas a lot of room to grow if it can recover to its post-IPO price of $119.58 in December 2020.
4. Palantir (PLTR)
Palantir had a successful 2023, with its stock price rising from $6.40 to a high of $20.27 in December. Both its revenue and earnings per share are expected to grow by about 20% this year, so there’s no reason the stock won’t continue to thrive as enterprise AI solutions remain in demand.
5. Upstart (UPST)
As an AI-powered lending assistant, Upstart’s revenue is closely linked with US federal interest rates. Despite high rates being one of the reasons the company failed to reach revenue forecasts in 2023, the Federal Reserve is expected to begin cutting interest rates in 2024. This means more individuals may be looking to borrow money this year, and Upstart’s services could be in higher demand.
When choosing the best AI stocks for 2024, we focused on the companies building the infrastructure for the AI revolution. The stocks on this list power AI and LLMs either by manufacturing the graphics processing units (GPUs) used in hyperscale data centers or by providing data analytics software integrating generative AI for big tech companies like Apple and Microsoft. You can trade these and other top AI stocks in one fund with the AI index available on City Index.
