Artificial intelligence, automation, and robotics are revolutionizing nearly every industry. Groundbreaking developments in AI, such as OpenAI’s ChatGPT, GitHub’s Copilot for AI-powered code generation, and Google’s Gemini AI model, have become well-known to many. From machine learning and large language models to smart applications, digital assistants, synthetic media, and autonomous vehicles, companies that fail to invest in AI risk falling behind. While many companies can gain from AI, a select few have made AI and automation the core of their business strategies. According to Argus, here are 10 of the top AI stocks to consider:
Microsoft Corp. (MSFT)
Microsoft has invested a substantial $13 billion in OpenAI and integrated ChatGPT into its Bing search engine. In addition, Microsoft has consolidated all its AI copilots into a unified AI experience called Microsoft Copilot. In May, the company released its first Responsible AI Transparency Report, which outlines its AI practices, goals, and accountability measures. Analyst Joseph Bonner highlights that Microsoft is heavily investing in AI through both internal development and strategic investments in AI startups. CEO Satya Nadella is prioritizing generative AI opportunities. Argus gives Microsoft a “buy” rating with a $526 price target, while the stock closed at $402.69 on August 8.
Alphabet Inc. (GOOG, GOOGL)
Alphabet, the parent company of Google and YouTube, integrates AI and automation across its business, from ad pricing and content promotion to Gmail’s spam filters. In March 2023, Google launched Bard, its AI chatbot. Later in December, Google introduced Gemini, its most advanced AI model to date. In May, Google also launched AI Overview, a service providing AI-generated summaries at the top of search results. Bonner notes that Google is focused on integrating its Gemini AI model across its tech stack. Argus has a “buy” rating for Alphabet with a $200 price target, and the stock closed at $162.03 on August 8.
Amazon.com Inc. (AMZN)
Amazon has embedded AI into every facet of its operations, including targeted advertisements, search and recommendation algorithms, and Amazon Web Services (AWS). AWS offers a wide range of AI and machine learning services, such as text analytics, automated code reviews, and chatbots. Amazon is reportedly planning to invest $100 billion over the next decade to build a network of AWS data centers to handle the immense AI workload. Analyst Jim Kelleher says the surge in AI cloud services has revitalized AWS. Argus gives Amazon a “buy” rating with a $205 price target, with the stock closing at $165.80 on August 8.
Nvidia Corp. (NVDA)
Nvidia, a leader in high-end chipmaking, provides the essential processing power required for advanced AI applications. Nvidia’s stock has been one of the best performers in recent years, largely due to its AI exposure. CEO Jensen Huang recently announced that Nvidia will start designing and releasing new AI chips annually instead of following the traditional two-year refresh cycle. Kelleher notes that Nvidia’s Blackwell platform supports generative AI for trillion-parameter large language models. Argus has a “buy” rating with a $150 price target for Nvidia, with the stock closing at $104.97 on August 8.
Meta Platforms Inc. (META)
Meta Platforms, the parent company of Facebook and Instagram, is a dominant force in social media and online advertising. Meta is reportedly planning to launch free AI customer-relations chatbots for businesses on its WhatsApp platform. This move is part of CEO Mark Zuckerberg’s strategy to offer Meta’s AI technology freely to gain market share and undercut competitors. Bonner points out that Zuckerberg has a history of building large user bases and then monetizing them effectively. Argus gives Meta a “buy” rating with a $600 price target, and the stock closed at $509.63 on August 8.
Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)
Taiwan Semiconductor Manufacturing is the world’s largest pure-play semiconductor foundry, producing advanced AI semiconductors for companies like Nvidia. In June, CEO C.C. Wei expressed optimism about the company’s future due to AI-driven demand. Kelleher says that the mainstream adoption of AI, along with lower inflation and a recovery in electronic device demand, will drive solid revenue growth for TSM. The company expects global semiconductor market demand to grow by 10% overall in 2024. Argus has a “buy” rating with a $200 price target, and the stock closed at $164.55 on August 8.
Adobe Inc. (ADBE)
Adobe, known for its creative content software, has integrated its Firefly generative machine learning model into products like Photoshop and Illustrator, generating significant customer interest. The company has also applied its Sensei AI and machine learning technology across its Adobe Analytics, Campaign, and Target products. Recently, Adobe assured users that it will not train its AI models on their content after concerns were raised by artists. Bonner believes Adobe will continue to incorporate more AI features across its product lineup. Argus has a “buy” rating with a $675 price target, with the stock closing at $530.24 on August 8.
ASML Holding NV (ASML)
ASML is the leading producer of photolithography systems and other equipment essential for semiconductor manufacturing. It is the only major supplier of extreme ultraviolet lithography equipment necessary for advanced AI chips. Companies like Taiwan Semiconductor and Samsung Electronics are some of ASML’s largest customers. Nvidia depends on these manufacturers to produce the AI chips required by Microsoft and Google for their AI-capable data centers. Kelleher expects demand for ASML’s products to remain strong as generative AI and high-end devices continue to grow. Argus has a “buy” rating with a $1,250 price target, and the stock closed at $876.65 on August 8.
International Business Machines (IBM)
IBM has long been at the forefront of AI development with its Watson supercomputer, aiming to revolutionize sectors such as healthcare, finance, and law. IBM’s Watson AI solutions include applications that improve customer service, automate workflows, and predict outcomes. Watson Studio even helps enterprises develop proprietary AI applications. In June, IBM introduced new enhancements to its Watsonx AI assistant. Kelleher notes that AI and hybrid cloud sales have helped balance out weaker consulting revenue for IBM. Argus has a “buy” rating with a $225 price target for IBM, with the stock closing at $190.94 on August 8.
Arista Networks Inc. (ANET)
Arista Networks provides cloud networking solutions for internet companies, cloud service providers, and enterprise data centers. Arista’s high-performance networking gear and data center switches are crucial for handling intensive AI workloads. The company credits growing demand for AI-related networking equipment for its recent positive sales growth guidance, which exceeded Wall Street expectations. Kelleher states that Arista is a leader in enterprise and data center cloud networking, positioning it to benefit significantly from the AI cloud services boom. Argus has a “buy” rating with a $390 price target, and the stock closed at $334.50 on August 8.
