Top 10 Best-Performing AI Stocks 2024

Artificial intelligence has become a focal point for investors on Wall Street, with AI stocks emerging as one of the most sought-after investment opportunities. The widespread recognition of AI's long-term potential, particularly following the global sensation caused by OpenAI's ChatGPT, has fueled this trend.

Top 10 AI Stocks 2024

I've compiled a list of the top 10 AI stocks for 2024, based on a comprehensive set of criteria. These stocks have been selected considering their year-to-date returns, inclusion in major AI-focused exchange-traded fund portfolios, coverage by at least one Wall Street analyst, and a minimum market capitalization of $2 billion.

The following list presents these high-performing AI stocks in descending order, ranked by their year-to-date performance. This compilation offers investors a snapshot of the most promising AI-related investment opportunities in the current market landscape.

Nvidia (NVDA)

Sector: Technology

Market Cap: $2.90 trillion

YTD Performance: 147.39%

Nvidia is a leading semiconductor company at the forefront of AI chip development. Its high-end GPUs are crucial for powering AI applications, including generative AI like ChatGPT. The company is experiencing strong demand from cloud vendors and consumer internet companies integrating AI into their businesses.

Nvidia's automotive division is also showing impressive growth, positioning the company well for the autonomous vehicle market. With exposure to multiple long-term growth trends and a strong barrier to entry due to the complexity of GPU development, Nvidia presents a compelling investment opportunity in the AI space. However, investors should be aware of its high valuation and exposure to the maturing PC market.

MicroStrategy (MSTR)

Sector: Technology

Market Cap: $28.20 billion

YTD Performance: 135.95%

MicroStrategy offers a unique blend of enterprise analytics software and cryptocurrency exposure. The company is enhancing its MicroStrategy ONE analytics platform with AI capabilities and has expanded its partnership with Microsoft to integrate advanced analytics into Azure OpenAI Service. This positions MicroStrategy to benefit from the growing demand for AI-powered business intelligence.

Additionally, as the largest corporate bitcoin investor, holding 190,000 bitcoins, the company provides indirect exposure to the cryptocurrency market. However, this dual focus on AI and crypto comes with both opportunities and risks, as the volatile cryptocurrency market can significantly impact the company's performance.

Arm Holdings (ARM)

Sector: Technology

Market Cap: $195.38 billion

YTD Performance: 125.44%

Arm Holdings is a dominant player in the mobile processor technology market, with its architecture used in 99% of premium smartphones. The company's energy-efficient designs are ideal for running generative AI on mobile devices, PCs, and data centers. Arm's licensing model generates significant revenue, and there's room for growth in sectors like data centers and automotive.

The recent adoption of Arm-based chips by major tech companies like Apple further solidifies its market position. However, investors should consider the emerging competition from companies like Intel, AMD, and open-source alternatives like RISC-V. Arm's success largely depends on the continued adoption and use of its technology across various devices and platforms.

PROCEPT BioRobotics (PRCT)

Sector: Healthcare

Market Cap: $3.66 billion

YTD Performance: 66.59%

PROCEPT BioRobotics represents an intriguing intersection of AI, robotics, and healthcare. The company's Aquabeam Robotic System, which uses Aquablation therapy for treating benign prostatic hyperplasia, combines automated robotics with minimally invasive surgical techniques. PROCEPT is actively working on integrating AI and machine learning into its treatments, leveraging collected data to enhance outcomes.

With the robotic surgical systems market expected to more than double by 2033, PROCEPT is well-positioned for growth. The company is also expanding globally, having recently completed its first procedures in Japan. However, investors should be aware of the company's high valuation relative to its book value and its reliance on the success of the Aquabeam technology.

Credo Technology Group (CRDO)

Sector: Technology

Market Cap: $5.03 billion

YTD Performance: 62.69%

Credo Technology Group is a key player in high-speed connectivity solutions, which are essential for data centers and AI applications. The company has shown strong market positioning within the tech sector and impressive revenue growth, with a 89.4% year-over-year increase in the fourth quarter. Credo's solutions are likely to see increased demand as AI applications require more sophisticated data center infrastructure. Analysts generally have an optimistic outlook for CRDO stock, and the company's performance has been aligned with Wall Street expectations. However, investors should be cautious of the stock's high valuation metrics and potential volatility. The company's success will depend on its ability to maintain its competitive edge in the rapidly evolving high-speed connectivity market.

Spotify Technology (SPOT)

Sector: Communications services

Market Cap: $58.67 billion

YTD Performance: 57.19%

Spotify is a global leader in music streaming, with a strong foothold in both subscription and ad-supported models. The company has been actively integrating AI into its platform, launching features like an AI DJ that curates personalized playlists and software that translates podcasts into different languages. This commitment to AI technology allows Spotify to better understand and cater to user preferences, potentially maximizing engagement and retention.

As Spotify expands into podcasts and other audio content, it diversifies its offerings and attracts a broader audience. The company also has opportunities to negotiate better terms with record labels and facilitate independent artist distribution. However, investors should be aware of the competitive landscape, especially with Big Tech companies entering the music business, and the challenges posed by variable content acquisition costs and complex royalty contracts with record labels.

Rumble (RUM)

Sector: Technology

Market Cap: $1.57 billion

YTD Performance: 54.22%

Rumble presents an unconventional AI play in the video-sharing platform space. As a conservative-leaning platform prioritizing free speech, Rumble positions itself as a competitor to YouTube. The company's CEO believes that AI will play a crucial role in combating potential content suppression by Big Tech platforms. Rumble has shown impressive revenue and subscriber growth, suggesting a potentially large addressable market.

The platform could see increased engagement during the 2024 election cycle, providing a potential catalyst for growth. However, investors should consider the risks associated with its reputation as a conservative platform, which may alienate some users and advertisers. Additionally, the company's performance may be influenced by political factors, such as the fortunes of certain political figures. Rumble's commitment to free speech principles may also present challenges in securing big-name advertisers.

GoDaddy (GDDY)

Sector: Technology

Market Cap: $20.33 billion

YTD Performance: 37.55%

GoDaddy, known primarily for domain registration and web hosting, has expanded its offerings to include a range of related services. The company's recent introduction of Airo, an AI-powered solution for website creation and business setup, positions it at the forefront of AI integration in web services. This innovative offering could attract entrepreneurs and small businesses seeking quick, comprehensive online presence solutions.

GoDaddy's market leadership in hosting and domain names, combined with its predominantly subscription-based revenue model, provides a stable foundation for growth. The addition of AI capabilities could help the company differentiate itself in a competitive market and potentially attract a new customer base. However, investors should be aware of the mature nature of the web hosting and domain name markets, as well as the intense competition in these sectors. GoDaddy's success will depend on its ability to leverage AI to enhance its services and maintain its competitive edge in a crowded market.

Qualcomm (QCOM)

Sector: Technology

Market Cap: $213.83 billion

YTD Performance: 36.28%

Qualcomm is a technology powerhouse known for its Snapdragon processors, which are ubiquitous in smartphones. The company is strategically positioning itself in the AI market by developing Snapdragon processors for laptops with on-device AI capabilities. These processors offer reduced latency and improved performance, potentially disrupting the laptop market. Qualcomm's strong presence in 5G wireless technology complements its AI initiatives, as 5G networks are crucial for many AI applications. The company's commitment to research and development ensures it stays at the cutting edge of technology.

Qualcomm's expansion into the laptop processor market with AI-enabled chips could open up new revenue streams and help it compete with established players like AMD and Intel. However, investors should be aware of the competitive landscape, including rivals like MediaTek and Samsung in the mobile chip market. Additionally, Qualcomm has faced antitrust lawsuits in the past, which is a risk factor to consider. Despite these challenges, Qualcomm's strong market position, innovative AI-focused products, and potential for growth in new markets make it an intriguing option for investors interested in AI stocks.

Netflix (NFLX)

Sector: Communications services

Market Cap: $278.99 billion

YTD Performance: 35.89%

Netflix stands out as a media powerhouse with a strong focus on AI integration. The company's sophisticated algorithms, which generate personalized recommendations and optimize content delivery, are among its most valuable assets. Netflix leverages advanced AI to analyze vast amounts of user data, predicting content preferences and informing content creation strategies. This AI-driven approach helps Netflix maintain its competitive edge in the streaming market. The company's extensive library of original content, available exclusively on its platform, serves as a strong differentiator.

Unlike many of its streaming competitors, Netflix has achieved high profitability. The introduction of ad-supported subscription tiers opens up new revenue growth opportunities. However, investors should consider the increasingly competitive streaming landscape and the challenges of consistently producing engaging original content. Netflix's domestic growth is largely reliant on subscription price increases, which may face resistance in a crowded market. Despite these challenges, Netflix's strong brand, global reach, and commitment to leveraging AI for personalization and content strategy make it a compelling option in the AI stock space.

How to Buy AI Stocks Steps by Steps

To purchase AI stocks, follow these steps:

1. Open a Brokerage Account: Begin by setting up an online brokerage account specifically for trading AI stocks. Compare different brokers based on their AI stock offerings, fees, and services. Once you've chosen a broker that aligns with your AI investment goals, complete the application process and fund your account. This step lays the groundwork for your AI stock trading journey.

2. Research AI Stocks: Utilize stock screeners to filter AI stocks based on criteria such as market capitalization, AI sector focus, and financial performance. Review analyst ratings for insights on AI stock potential. Consider your risk tolerance; established AI companies may offer stability, while emerging AI startups could provide higher growth potential. This research helps you identify AI stocks that match your investment strategy.

3. Decide How Many AI Stock Shares to Buy: Determine the number of AI stock shares you want to purchase based on your budget and the stock's price. Diversify your AI investments across different subsectors like machine learning, natural language processing, or robotics. If certain AI stocks are expensive, consider fractional shares to gain exposure without committing large amounts of capital. Align this decision with your AI investment goals and risk tolerance.

4. Choose an Order Type: Select the appropriate order type for your AI stock purchase. A market order buys AI stocks immediately at the current price, while a limit order allows you to set a specific purchase price for the AI stock. Understanding these options helps you make informed decisions when trading AI stocks.

5. Place Your Order: After deciding on the AI stock, number of shares, and order type, place your order through your brokerage platform. Double-check all details before confirming to ensure accuracy in your AI stock purchase. Monitor the order status to confirm successful execution of your AI stock trade.

6. Manage Your AI Stock Portfolio: Regularly review and adjust your AI stock investments. Stay informed about AI industry trends, monitor individual AI stock performance, and review updated analyst ratings. Learn when to sell AI stocks to optimize profits or minimize losses. Periodically rebalance your AI stock portfolio to maintain alignment with your financial goals and risk tolerance in the rapidly evolving AI sector.

What to Look for When Choosing Stocks to Buy

When determining which stocks to invest in, it is crucial to take into account the following key factors:

• Financial Health: Examine the company's balance sheet to evaluate its financial stability. Consider its debt levels and overall fiscal condition. Additionally, review the company's profit margins over time, as declining margins may signal financial challenges.

• Market Position: Evaluate the company's standing within its industry. Determine if it's gaining or losing market share compared to competitors. A robust competitive advantage often indicates future success.

• Revenue and Profit Trends: Analyze the company's history of sales and earnings growth. Steady increases in these areas are positive indicators, while decreasing revenues may limit future opportunities and potential success.

• Stock Valuation: Consider the stock's price in relation to its earnings and cash flow. Understanding its valuation is essential for assessing future growth potential. Seek stocks that offer good value relative to their growth prospects.

• Leadership Quality: Evaluate the company's management team and their alignment with shareholder interests. Assess whether executives are self-serving or genuinely focused on growth. Transparency and integrity are vital for making informed investment choices.

• Growth Prospects: Investigate the company's potential for future expansion. Identify clear pathways for growth and development, which can enhance its long-term outlook.While these factors are crucial when deciding on an investment, it is also important to consider the company's capital allocation strategies, such as share buybacks and dividend policies, which may impact shareholder value. Thoroughly evaluating these features can help investors make more informed decisions when selecting stocks to buy.