The macroeconomic challenges of the past few years are starting to fade and investors are looking to the future.later Nasdaq Composite It plunged in 2022, suffering its worst performance since 2008, but rebounded strongly in 2023, rising 43%.
Something more could happen. Since the Nasdaq Composite Index began trading in his 1972 year, the tech stock index has risen again every year following a market recovery, averaging a 19% gain in the second year. However, the economy is the wild card here, and we could see an economic downturn in 2024 as well. However, historical patterns suggest this could be a good year for investors.
Recent developments in the artificial intelligence (AI) field fueled the market's rise last year, and we believe it will likely rise further in 2024. Estimates vary widely, but generated AI is expected to add between $2.6 trillion and $4.4 trillion annually to the global economy. According to research from the McKinsey Global Institute, that will be the case for the next few years. This will result in a windfall for many companies in this space.
Here are the top 7 AI stocks to buy in 2024 before the Nasdaq reaches new heights.
Nvidia (NVDA 4.17%) It is the epitome of AI innovation. The company's graphics processing units (GPUs) are already industry standard chips in a growing number of AI use cases, including data centers, cloud computing, and machine learning, and the company is rapidly adapting its processors to the needs of generative AI. Ta. Although the company is ramping up production, the AI chip shortage is expected to last until 2025 as demand continues to grow. The specter of competition looms, but so far Nvidia has stayed ahead of the competition by spending heavily on research and development.
The company's triple-digit year-over-year growth rate is expected to continue through 2024. Despite that outlook, NVIDIA stock remains significantly undervalued, with a price-to-earnings ratio (PEG ratio) of less than the norm. For undervalued stocks.
microsoft (MSFT 1.22%) We invested $13 billion in OpenAI, the creator of ChatGPT, to shine a spotlight on generative AI and help fuel the AI boom. The company's technology peers also jumped on board, and an AI gold rush began. Microsoft has taken advantage of this advantage and integrated OpenAI's technology into its Bing search and broader range of cloud-based products.
Copilot, an AI productivity assistant, could generate up to $100 billion in additional revenue by 2027, according to some analysts, although estimates vary. This and other AI tools have already helped Azure Cloud grow faster than its competitors in the third quarter, and Microsoft attributes 3 percentage points of that growth to AI.
The company's stock is selling for 35 times forward earnings, a slight premium to its price-to-earnings ratio (P/E) of 26 times. S&P500. Still, this looks attractive given Microsoft's growth potential.
alphabet (Google 2.02%) (GOOG 2.06%) has long used AI to improve the relevance of its search results and digital ads. The company was quick to recognize the potential of generative AI and announced plans to enhance many of its Google and Android products and add new AI tools to its search products. Additionally, Google Cloud, the world's third-largest cloud infrastructure provider, is well suited to provide AI systems to its customers.
A collaboration between Google and Alphabet's AI research lab DeepMind has resulted in Gemini, which the company touts as “the largest and most capable AI model.” Google Cloud's Vertex AI provides 130 base models that enable users to quickly build and deploy generative AI apps.
Add to that the continued recovery in its digital advertising business, and Alphabet's valuation of 27 times earnings seems like a steal.
There is a famous story called, Amazon (AMZN 1.20%) was slow to recognize the opportunity in AI, but the company's history tells a different story. Amazon continues to deploy AI for applications such as suggesting relevant products to shoppers, making recommendations to watch on Prime Video, scheduling e-commerce deliveries, and predicting inventory levels. It is working. Just recently, Amazon began testing an AI tool designed to answer shoppers' questions about products.
Amazon Web Services (AWS) stocks all of the most popular generative AI models for cloud customers in Bedrock AI and also introduces dedicated AI chips Inferentia and Trainium to accelerate AI on its infrastructure doing.
Now that inflation has slowed significantly, more consumers and businesses are patronizing Amazon, and AI could help boost Amazon's fortunes.
meta platform (meta 1.95%) The company also has a long and distinguished history of leveraging AI to its advantage. From identifying and tagging people in photos to displaying relevant content on social media platforms, Meta has not hesitated to deploy AI systems.
Unlike some big tech rivals, Meta doesn't have a cloud infrastructure service to sell its AI products, but it quickly developed a workaround. After developing his open source Llama AI model, Meta made it available for a fee on all major cloud services. Additionally, Meta offers a suite of free, AI-powered tools to help advertisers succeed.
Improving economic conditions will undoubtedly boost the company's digital advertising business. And with the stock trading at just 22 times forward earnings, Meta is cheap relative to its opportunity.
6. Palantir Technologies
Palantir Technologies (PLTR 2.32%) With 20 years of experience building AI-powered data analytics, we were ready to meet the challenges when AI went mainstream. In just a few months, the company added generative AI models to its portfolio and layered these on top of its data analysis tools. The launch of the Palantir Artificial Intelligence Platform (AIP) has generated a lot of excitement. “Demand for AIP is unlike anything seen over the past 20 years,” management said.
When fears of a recession were rising, companies cut most non-essential spending, such as data analytics and AI services, but now demand for these services has rebounded, especially in relation to generative AI. are doing.
Looking ahead one year, Palantir's PEG ratio is less than 1, which helps illustrate how cheap the stock is.
tesla (TSLA 0.15%) It has become a hot topic by pushing electric vehicles (EVs) into the mainstream. In 2023, the company's Model Y topped the list of the world's best-selling cars by a wide margin, making it the first EV to do so. However, the extent of future prosperity will likely be related to AI. The company's “fully self-driving” system still lives up to its name, but success on this front could be a boon for shareholders.
At Ark Investment Management big idea 2023 According to the report, the company estimates that robotaxis could generate $4 trillion in revenue in 2027. With an estimated 2.7 million vehicles on the road collecting data, Tesla may hold an insurmountable technological advantage. if Cracking the code about autonomous driving. Some analysts estimate that the software is already worth tens of billions of dollars.
Finally, 6x expected sales is a pretty reasonable valuation for an industry leader with a wealth of data.
Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool's board of directors. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool's board of directors. Alphabet executive Suzanne Frye is a member of The Motley Fool's board of directors. Danny Vena has worked at Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, Palantir Technologies, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, Palantir Technologies, and Tesla. The Motley Fool has a disclosure policy.