10 Best AI stocks on the ASX for 2024

The landscape of the Australian Securities Exchange (ASX) is increasingly being influenced by the rapid advancements in Artificial Intelligence (AI). This is why AI stocks on the ASX are a blooming sector that has captured the attention of investors who are optimistic about the potential of this transformative technology.

The field of AI is more than just a trend, it represents a fundamental shift in how businesses operate and create value. As AI technology continues to reshape various industries including healthcare, finance, retail, and logistics, investors are paying closer attention to the leading companies in this domain.

This article will delve into the 10 top AI stocks on the ASX for 2024. By understanding these major AI companies, investors can make informed decisions on how to allocate their investment portfolios to take advantage of the AI revolution.

What are ASX AI stocks?

To understand stocks related to the AI field, one must first have a grasp of AI itself.

Artificial Intelligence (AI) refers to intelligent behaviors exhibited by computer systems, capable of performing tasks that typically require human intelligence. The development of AI involves multiple disciplines and technologies, including machine learning, deep learning, natural language processing, computer vision, robotics, fuzzy logic, and evolutionary computation. These technologies enable computers to learn automatically from data, understand human language, recognize images, mimic expert decision-making, perform physical tasks, represent and organize information, deal with uncertainty, and optimise problem-solving. The applications of AI are extremely broad, covering almost all industries and fields.

For instance, in the healthcare sector, AI is used for disease diagnosis, drug development, and medical imaging analysis. In the financial services sector, AI is applied to risk management, credit assessment, and investment decision-making. In the transportation and logistics sector, AI enables autonomous driving and route optimization.

ASX AI stocks refer to the stocks of companies listed on the Australian Securities Exchange (ASX) that are involved in the development, application, or integration of Artificial Intelligence (AI) technology. These companies develop or utilise AI technology across various industries and fields, continuously enhancing the efficiency of their products, services, and operations.  This closely links their growth potential to the advancement of AI technology. Of course, AI stocks also include those of companies that provide support for AI development, such as data centers and cloud computing firms; the growth of these companies is closely linked to the advancement of AI.

How to find the best AI shares on the ASX?

When looking for companies focused on AI products, it is necessary to consider a range of factors including the company's:

• Financial health: such as revenue growth, profit margins, cash flow, and debt levels

• Market share: industry position, customer base

• Investment in research and development: R&D expenditure, number of patents

• Technological strength: core technology platforms, innovation capabilities, technology partnerships

• Market application and prospects: target market, market potential, successful case studies

• Management and governance: leadership, strategic planning, transparency)

• Financial metrics: market cap, price-to-earnings ratio, price-to-book ratio, PEG ratio, debt ratio

• Market performance and analyst ratings: stock price performance, technical analysis, analyst ratings, target prices

• Industry trends and policy support: technological development, market demand, government policies, industry standards)

By evaluating these multi-dimensional factors, you can identify AI stocks with investment potential.

For Australian investors, moomoo stock screener can be utilised to facilitate this screening process. The moomoo stock screener can help investors quickly pinpoint high-quality stocks by setting criteria for various financial and technical indicators, including market cap.

10 best AI stocks to buy on the ASX

Here are top-performing AI stocks that are worth paying attention to and are listed on the ASX.

WiseTech Global Ltd (WTC)

WiseTech Global is an Australian company that provides logistics software solutions. Its flagship product, CargoWise One, is an integrated supply chain execution platform aimed at helping logistics and freight companies manage complex business processes. The company also invests in the field of AI and applies AI technology to optimise its product features, such as improving the accuracy of cargo tracking through machine learning algorithms and reducing transportation costs through predictive analytics.

Xero Ltd (XRO)

Xero is a cloud-based accounting software provider headquartered in New Zealand, offering accounting software services for small and medium-sized enterprises. Its services include bookkeeping management, invoicing, payment tracking, and more, to simplify the financial management tasks of businesses. Xero leverages AI technology to automate financial processes, such as automatically categorizing transactions, intelligent invoice matching, and improving customer service experiences through natural language processing technologies.

Nextdc Ltd (NXT)

NextDC is an Australian data center operator that specialises in providing secure and efficient data centre solutions and services for enterprises. The company operates advanced data center facilities in multiple cities. Although the company's business does not involve the development and application of AI, it provides indispensable computing power support and large-capacity storage solutions for the training, development, and operation of AI.

Macquarie Technology Group Ltd (MAQ)

Macquarie Technology Group is an Australian telecommunications company that specialises in providing data center, cloud computing, cybersecurity, and telecommunications services to businesses and government agencies in Australia. The company's data center operations are empowering the development of AI, and its future growth is expected to benefit significantly from the AI wave.

Megaport Ltd (MP1)

Megaport is a leading global network service provider, offering flexible connectivity services through its Software-Defined Networking (SDN) platform. Enterprises can rapidly establish connections with cloud service providers via Megaport's platform. Although Megaport's SDN technology is not a direct application of AI, it supports rapid connections to cloud services, which is crucial for AI applications that require substantial computational resources.

Appen Ltd (APX)

Appen is a company that provides high-quality training datasets for the development and optimization of machine learning models. It has an extensive network of contributors worldwide, enabling it to offer customised data collection and annotation services to clients. Appen is directly involved in the AI development process, as the training data it provides is crucial for the training of machine learning models. Additionally, the company utilises AI technology internally to optimise its data annotation workflows and enhance the efficiency of its platform.

BrainChip Holdings Ltd (BRN)

BrainChip is a company focused on neuromorphic computing technology, whose core technology mimics the structure and working principles of the human brain's neural networks, enabling efficient pattern recognition and real-time data analysis under low power consumption conditions. BrainChip's flagship product, Akida, is designed for edge computing devices and can handle complex artificial intelligence tasks locally without relying on cloud computing resources. This makes Akida widely applicable in fields such as the Internet of Things (IoT), smart security, and autonomous vehicles.

Ai-Media Technologies Ltd (AIM)

Ai-Media is a company that provides media accessibility services, including captioning, translation, and audio description. The company utilises advanced AI technologies, such as Automatic Speech Recognition (ASR) and Natural Language Processing (NLP), to enhance the efficiency and quality of its services. Through these technologies, Ai-Media can quickly and accurately generate subtitles and translated content, while also offering professional audio description services to help visually impaired individuals better understand and enjoy multimedia content. Furthermore, Ai-Media provides comprehensive media accessibility solutions for broadcasting, film, television, and online platforms, ensuring content accessibility and inclusivity to meet the needs of diverse users.

Bigtincan Holdings Ltd (BTH)

Bigtincan Holdings is a software company that integrates content management, customer relationship management (CRM), sales training, and communication tools through its platform, enabling sales teams to work more efficiently. The company's technology leverages artificial intelligence (AI) and machine learning (ML) to analyse sales data, providing personalized sales recommendations and training content, thereby enhancing sales performance.

Dubber Corp Ltd (DUB)

Dubber is a company that provides unified communication recording solutions, with its core product being a cloud-based automatic recording and transcription service. Dubber utilises AI technology to enhance its communication recording solutions, including the automatic transcription of phone calls and video conferences, and offers insights through advanced features such as sentiment analysis.

How to buy ASX AI stocks

Investing in AI stocks on the Australian Securities Exchange (ASX) can be done in various ways, and using a share trading platform like moomoo is a very convenient option. Here are the steps to invest in AI stocks on the ASX using moomoo:

Opening an account

Visit the moomoo official website or download the moomoo app. Click on "Open Account", upload identification documents (such as a passport) as prompted, and complete other identity verification and account registration steps. To ensure you understand the investment risks, moomoo will require you to fill out a risk assessment questionnaire. This helps the platform recommend suitable investment products for you.

Funding your account

After logging into your account, select the "Deposit" option and follow the instructions to choose a suitable payment method (such as bank transfer, etc.). Complete the transfer operation according to the instructions to ensure funds are successfully transferred into your moomoo account.

Searching and selecting AI Stocks

On the moomoo platform, use the search function to enter the AI stock code or company name you are interested in. For example, you can search for WiseTech Global (WTC), Xero Ltd (XRO), BrainChip Holdings Ltd (BRN), etc. Click on the stock code or company name to view detailed company information, financial data, and news updates.

Placing a buy order

Determine the type of trade you want to make, such as a market order (executed at the current market price) or a limit order (set at a specific price). Enter the number of shares you wish to purchase. Carefully check the order details, including the stock code, transaction price, and quantity, then click the "Submit" or "Buy" button.

Monitoring and managing investments

After logging into your account, view your holdings and related earnings on the positions page. Adjust your positions in a timely manner according to market conditions and personal investment strategies, such as adding to, reducing, or closing positions. Be sure to set reasonable stop-loss points for each trade to avoid significant losses.

Learning and research

Moomoo provides a wealth of market information, research reports, and educational content to help you better understand market dynamics and investment strategies. Regularly follow the latest developments and trends in the AI industry through moomoo to make wiser investment decisions.

Pros of investing in ASX artificial intelligence stocks

High growth potential

AI technology is in a stage of rapid development, with many companies continuously launching new products and services. As demand for AI technology increases across various industries, the revenue and profits of related companies are expected to continue growing.

Diversified opportunities

AI technology has a wide range of applications in multiple fields such as healthcare, finance, manufacturing, and retail. Investors can choose AI stocks from different industries to diversify their investment portfolio. On the ASX, there are a variety of options ranging from small startups to large, established companies, allowing investors to select suitable targets based on their risk preferences and investment objectives.

Strong R&D capabilities

Australia is home to several world-class universities and research institutions that have cultivated a large number of experts in the field of AI, providing a strong talent pool for local companies. To a certain extent, this allows these companies to maintain a leading position in research and development. For investors, this means that the companies they invest in can continue to innovate, maintain a technological edge, gain a competitive advantage, and achieve long-term, stable growth.

Favourable market environment

The Australian Securities Exchange (ASX) is a mature capital market, known for its strict regulation and high transparency, providing investors with a safe and reliable environment. In addition, ASX has active trading volumes and good liquidity, allowing investors to conveniently buy and sell stocks and flexibly enter and exit the market. These characteristics are particularly important for investors as they reduce transaction costs and risks, enhance investment flexibility and security, and enable investors to better protect and grow their assets amidst market fluctuations.

Cons of investing in ASX artificial intelligence stocks

High volatility

AI stocks typically belong to the high-tech sector, and their prices are often significantly influenced by market sentiment and technological advancements, leading to frequent and substantial price fluctuations. The significant short-term price swings can impose considerable psychological stress and financial risk on investors.

High valuation risk

Many AI companies, due to their high growth potential, often enjoy high price-to-earnings ratios. This means that even if a company's performance is poor, its stock price may remain at a high level, increasing the risk of investment. In some cases, the market's excessive optimism about AI technology can lead to the formation of bubbles, and if the bubble bursts, stock prices may plummet.

Market competition

AI technology is rapidly evolving, with new products and methods emerging continuously. If a company cannot keep pace with technological progress, it may lose market share, affecting its profitability. At the same time, fierce competition from rivals can compress a company's profit margins. Moreover, large tech companies like Google and Microsoft have significant resources and technological advantages in the AI field, making it difficult for smaller companies to compete.

Financial risk

Many AI companies are still in the early stages of development and have not yet achieved stable profitability. The financial situation of these companies may be unstable, presenting significant financial risks. High R&D spending and market competition can lead to tight cash flows, increasing the financial pressure on the company.

What does the future hold for AI shares in Australia?

The release of Chat GPT has pushed the current AI wave, but the main reasons for the explosive growth of AI technology in recent years can be summarised into three points:

1. Machine Learning and Deep Learning: Breakthroughs in machine learning and deep learning technologies are the core drivers of the AI explosion. Especially deep learning technology, through multi-layer neural network models, can process and analyse large-scale data, achieving higher accuracy and efficiency.

2. Big Data: With the popularity of the Internet and the Internet of Things, the amount of data is growing exponentially. These massive amounts of data provide rich training materials for AI technology, enabling it to better understand and predict complex real-world problems.

3. Improvement in Computing Power: The development of cloud computing and high-performance computing technologies has made it more feasible to handle large-scale data and complex models. The emergence of specialized hardware such as GPUs (Graphics Processing Units) and TPUs (Tensor Processing Units) has greatly improved computational efficiency.

It is undeniable that AI has a very wide range of application scenarios covering various industries, which has attracted a large amount of capital investment and government policy support for the development of AI. It can be said that the explosion of AI technology is the result of the joint action of various factors. Technological progress, industry applications, policy support, capital investment, and the improvement of social cognition have jointly promoted the rapid development of AI technology.

In Australia, the short-term risks of market volatility and potential stock price bubbles cannot be overlooked. For long-term investors, it's crucial to focus on the underlying profitability of ASX-listed companies rather than just their association with AI development. Prudent investment decisions should be based on a thorough analysis of a company's financial health and its ability to sustain growth, rather than being driven by the hype surrounding AI applications. This approach helps to mitigate risks and ensures that investment strategies are grounded in the realistic assessment of a company's long-term value.

Start investing in ASX AI stocks

AI technology, aimed at enabling machines to perform tasks that require human intelligence, has seen an explosion in recent years, thanks to the development of deep learning, big data technology, and high-performance computing power. Its wide range of applications has made it highly regarded by the market. However, for Aussie investors, understanding the risks involved in AI Stocks is essential to avoid significant losses.

FAQs about investing in ASX AI stocks

1. What is the best way to invest in AI?

When investing in the AI sector, it is crucial to consider a range of factors including technological advancements, market demand, policy direction, and potential risks. By carefully selecting stocks of companies with growth potential, utilising AI ETFs for diversified investments, closely monitoring policy and regulatory developments, implementing effective risk management strategies, and continuously engaging in market learning and research, you will be able to more accurately seize opportunities in AI investments and achieve steady growth of your assets.

2. Are ASX AI stocks a good investment?

AI stocks on the ASX possess high growth potential and long-term investment value, but they also come with higher risks. Before making investment decisions, investors should thoroughly understand the fundamentals of the companies, industry trends, and market conditions, and reasonably assess their own risk tolerance to formulate a scientific investment strategy. By diversifying investments and holding long-term, risks can be reduced to a certain extent, leading to stable returns. If you are confident in the development of AI technology and willing to take on some risk, artificial intelligence stocks can be a worthwhile investment option to consider.