In this article, we take a look at 10 high growth AI stocks to buy.
OpenAI’s ChatGPT has taken the world by storm.
In just five days, the AI chat app reached 1 million users, and in two months since its launch, ChatGPT has gained 100 million users, making it arguably the fastest growing internet consumer app in history.
While it makes mistakes, ChatGPT has offered a lot of utility to a lot of people.
Even tech leaders are impressed.
When it came to ChatGPT, NVIDIA Corporation (NASDAQ:NVDA) CEO Jensen Huang said earlier this month, “When was the last time we saw a piece of technology that is so versatile that it can solve problems and surprise people in so many ways so often? It can write a poem of course, it could fill out a spreadsheet, it can write a SQL query and do a SQL query, it can write python code, it can write Verilog. And if it can’t do it today, of course it will be able to do it someday. So the fact that you have this tool that can do all these different things has really surprised a lot of people around the world. Now, for a lot of people who have been working on this, we have been waiting for this moment. This is the iPhone moment, if you will, of artificial intelligence.”
Microsoft Corporation (NASDAQ:MSFT) founder Bill Gates also said recently that ChatGPT ‘will change our world’.
Microsoft Corporation (NASDAQ:MSFT), of course, could benefit from ChatGPT’s success given it invested $1 billion in OpenAI in 2019 and another $10 billion in the company this year.
OpenAI also uses Microsoft Corporation (NASDAQ:MSFT)’s cloud platform, Microsoft Azure, for a lot of its processing. If ChatGPT continues to grow, the company’s demand for Microsoft Azure will likely continue to increase too.
Microsoft is also incorporating ChatGPT into its search engine, Bing, to potentially gain market share from Google.
Similarly, a lot of other big tech companies also have substantial AI growth potential in the future given how transformative the industry could be.
The technology industry can change very quickly where companies can gain and lose market share in a short amount of time. As a result, it could be a good idea for long term investors to own a well diversified portfolio of leading stocks across many different sectors.
Photo by mahdis mousavi on Unsplash
Methodology
For our list of 10 High Growth AI Stocks to Buy, we took 10 stocks with competitive advantages that have substantial growth opportunities in AI in the future and we ranked them based on their market capitalization.
High growth in this article means a company has meaningful growth potential in AI in the long term.
We nevertheless include the EPS Growth Forecast Next 5 Years ratio as a datapoint for each company.
For those of you interested, check out 10 Best Stocks to Buy for Investment.
10 High Growth AI Stocks to Buy
10. International Business Machines Corporation (NYSE:IBM)
Market Capitalization as of 2/16: $122.06 billion
EPS Growth Forecast Next 5 Years: 6.67%
International Business Machines Corporation (NYSE:IBM) has growth potential in AI given it’s one of the leaders in quantum computing. If successful, quantum computing could be faster than conventional computers at certain computing tasks and that faster speed could make AI even more useful as a result.
International Business Machines Corporation (NYSE:IBM) explains its quantum business, “This nascent technology is widely expected to solve valuable problems that today’s most powerful classical supercomputers cannot solve and never will. Our community of clients and partners comprises 210+ Fortune 500 companies, academic institutions, national labs, and startups. With the largest fleet of 20+ of the most powerful quantum systems in the world, we are aiming to turn the world’s most challenging problems into valuable opportunities.”
Given quantum computers are still in their development stage, however, International Business Machines Corporation (NYSE:IBM) is not expected to grow very quickly in the next five years given its EPS growth forecast next 5 year ratio of 6.67%. In the long term, the company does have potential if it successfully maintains its leadership in quantum computing.
Alongside Alphabet Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL), International Business Machines Corporation (NYSE:IBM) is a stock with meaningful AI growth potential in the future.
9. SAP SE (NYSE:SAP)
Market Capitalization as of 2/16: $144.52 billion
EPS Growth Forecast Next 5 Years: 15.41%
SAP SE (NYSE:SAP) is a leading enterprise software company that has incorporated AI into its software to potentially help its customers. Among other things, the company offers AI-powered insights, recommendations, and more in its SAP applications. If SAP SE (NYSE:SAP) can successfully offer more value with AI in its products, the company could potentially realize higher demand in the long term. As of February 16, the company has a forward P/E ratio of 17.45 and a market capitalization of $144.52 billion, ranking #9 on our list of 10 High Growth AI Stocks to Buy.
8. Oracle Corporation (NYSE:ORCL)
Market Capitalization as of 2/16: $236.52 billion
EPS Growth Forecast Next 5 Years: 8.35%
Oracle Corporation (NYSE:ORCL) has AI growth potential given it is a leading enterprise software company that could realize higher demand if it successfully incorporates AI into its software in a way that offers more value to its customers. Oracle Corporation (NYSE:ORCL) also has a cloud business that could potentially realize higher demand if AI processing needs increase. One of Oracle Corporation (NYSE:ORCL)’s cloud business customers is TikTok which uses AI to make better suggestions.
7. ASML Holding N.V. (NASDAQ:ASML)
Market Capitalization as of 2/16: $262.44 billion
EPS Growth Forecast Next 5 Years: 29.80%
ASML Holding N.V. (NASDAQ:ASML) is a leading semiconductor equipment producer that is on the cutting edge in its field. Considering AI apps require computer processing that uses semiconductors, ASML Holding N.V. (NASDAQ:ASML) could realize higher demand if AI processing increases faster than expected. Although shares currently trade for a P/E ratio of 43.18, analysts expect the company to grow EPS substantially over the next 5 years.
Baron Opportunity Fund commented on ASML Holding N.V. (NASDAQ:ASML) in a Q2 2022 investor letter,
ASML Holding N.V. designs and manufactures semiconductor production equipment. It specializes in photolithography equipment, where light sources are used to photo-reactively create patterns on wafers that become printed circuits. ASML is the dominant leader across all types of lithography but, most importantly, is the only company selling equipment for extreme ultra-violet (EUV) lithography, the latest generation technology.
Indeed, because of the stalling out of Moore’s Law, advanced lithography of larger and multi-patterned silicon chips has been critical for leading-edge chip manufacturing and continued improvement in semiconductor chip performance over time. The company is well positioned to continue growing above industry rates as it rapidly adds capacity across its entire business to meet rising industry demand, especially from leading-edge customers continuing to invest to stay ahead of their competitors and drive chip performance forward.
Additionally, the introduction of high-NA EUV technology in the middle of the decade will add another leg to the growth opportunity.
6. Meta Platforms, Inc. (NASDAQ:META)
Market Capitalization as of 2/16: $447.07 billion
EPS Growth Forecast Next 5 Years: 3.63%
Meta Platforms, Inc. (NASDAQ:META) has a lot of potential in AI given it has billions of monthly users it could offer AI services to. If it is successful in terms of making its metaverse products, Meta Platforms, Inc. (NASDAQ:META) could also potentially incorporate AI into the metaverse and potentially sell more high margin services as a result. Although analysts only see the company growing EPS by an average of 3.63% a year over the next 5 years, the company has substantially higher growth potential in the long term if it is successful in the metaverse and AI.
With its market capitalization of $447.07 billion as of 2/16, Meta Platforms, Inc. (NASDAQ:META) ranks #6 on our list of 10 High Growth AI Stocks to Buy.
Like Meta Platforms, Inc. (NASDAQ:META), Alphabet Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL) are stocks with meaningful growth potential in AI in the future.
5. NVIDIA Corporation (NASDAQ:NVDA)
Market Capitalization as of 2/16: $541.25 billion
EPS Growth Forecast Next 5 Years: 21.3%
NVIDIA Corporation (NASDAQ:NVDA) is a leading producer of GPUs which is more useful at certain AI processing tasks than conventional semiconductors. As a result, demand for NVIDIA Corporation (NASDAQ:NVDA) could increase if AI demand increases substantially and the company successfully maintains its processing advantage for AI for certain tasks. Analysts expect NVIDIA Corporation (NASDAQ:NVDA) earnings to be $4.33 per share in 2022, $3.27 per share in 2023, $4.29 per share in 2024, and $5.55 per share in 2025.
4. Amazon.com, Inc. (NASDAQ:AMZN)
Market Capitalization as of 2/16: $1.01 trillion
EPS Growth Forecast Next 5 Years: 46%
Amazon.com, Inc. (NASDAQ:AMZN) ranks #4 on our list of 10 High Growth AI Stocks to Buy given its market capitalization of $1.01 trillion. Considering it owns the leading cloud computing business in the world in Amazon Web Services, Amazon.com, Inc. (NASDAQ:AMZN) could potentially benefit from AI growth with more cloud computing demand. By itself, Amazon Web Services is already a very big company with full year 2022 segment sales of $80.1 billion and segment operating income of $22.8 billion.
Analysts see Amazon.com, Inc. (NASDAQ:AMZN) growing EPS considerably over the next 5 years given the company’s low EPS base. Nevertheless the company has substantial long term EPS growth potential if it maintains its cloud computing market share.
3. Alphabet Inc. (NASDAQ:GOOG)
Market Capitalization as of 2/16: $1.22 trillion
EPS Growth Forecast Next 5 Years: 15.51%
Alphabet Inc. (NASDAQ:GOOG) ranks #3 on our list of 10 High Growth AI Stocks to Buy given its market capitalization of $1.22 trillion. In terms of growth, Alphabet Inc. (NASDAQ:GOOG)’s sales could decline or substantially underperform expectations from AI or they could grow depending on how well the company innovates in the future.
Alphabet Inc. (NASDAQ:GOOG) currently owns the most popular search engine in the world in Google which is now facing more competition from the AI-powered Bing. Although the AI Bing makes a lot of mistakes currently, it is expected to improve over time and the improvement could take market share from Google if Alphabet Inc. (NASDAQ:GOOG) doesn’t innovate. AI powered Bing could also increase processing costs for Google which would be a headwind for Alphabet Inc. (NASDAQ:GOOG)’s margins. As a result, the company is arguably the riskiest stock on our list even though it is a blue chip.
Alphabet Inc. (NASDAQ:GOOG) also has AI growth potential given it has invested a lot into AI products such as Waymo that could help grow the company’s bottom line in the long term if it is successful.
2. Microsoft Corporation (NASDAQ:MSFT)
Market Capitalization as of 2/16: $1.95 trillion
EPS Growth Forecast Next 5 Years: 11.77%
Microsoft Corporation (NASDAQ:MSFT) benefits from AI in multiple ways. Given it sells enterprise software, the company can incorporate AI into its software to make it potentially more useful for its customers. If its software is more useful, Microsoft Corporation (NASDAQ:MSFT) could potentially realize higher demand. Second, Microsoft Corporation (NASDAQ:MSFT) has a large cloud computing business that could realize more demand from AI processing in the future. Third, the company owns Bing which could gain market share if it successfully incorporates AI even though it is currently error prone. Finally, Microsoft Corporation (NASDAQ:MSFT)’s investment in OpenAI could increase in value if ChatGPT becomes very profitable in the long term.
1. Apple Inc. (NASDAQ:AAPL)
Market Capitalization as of 2/16: $2.43 trillion
EPS Growth Forecast Next 5 Years: 8.13%
Apple Inc. (NASDAQ:AAPL) ranks #1 on our list of 10 High Growth AI Stocks to Buy given its market capitalization of $2.43 trillion. The tech giant has substantial AI growth potential given many iPhone users use Siri daily. If AI technology improves, Siri could improve and iPhones could potentially offer even more value. If iPhones offer substantially more value, Apple Inc. (NASDAQ:AAPL) could potentially sell more iPhones. Apple Inc. (NASDAQ:AAPL) also has AI growth potential given its substantial financial resources which could allow the company to invest in potentially attractive AI companies in the future.
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Disclosure: None. 10 High Growth AI Stocks to Buy is originally published on Insider Monkey.
