Finance

AI Stocks to Reach $300 Billion. What’s Worth the Investment?

Dan Nicholson

The post-pandemic years have witnessed rapid transformations in the field of artificial intelligence with the release of tools like Google's Gemini and OpenAI's ChatGPT. AI is a continuously expanding sector, which makes AI growth stocks a trending topic among investors. According to Statista, the AI market is expected to witness an annual growth rate of 15.83%. A number of AI stocks are currently surging in the market and promise stable earning growth throughout the year.

The Top 5 AI Growth Stocks

Below are some of the best-performing AI stocks, according to experts. As reported by Forbes, Nvidia Corporation (NVDA) is still ruling the market with a 287% annual return; on the other hand, other AI stocks such as Meta Platforms, Inc. (META) and Advanced Micro Devices, Inc. (AMD) are offering an annual return of more than 100% currently.

Top Performing AI Growth Stocks 1-Year Return (in %)
Nvidia Corporation (NVDA)

 

287

 

Meta Platforms, Inc. (META)

 

175

 

Advanced Micro Devices, Inc. (AMD)

 

140

 

Amazon.com, Inc. (AMZN)

 

90

 

Arista Networks, Inc. (ANET)

 

88

 

Up-and-Coming Leaders

Cloudflare, a reliable cloud provider across AI startups, is expected to reflect annual revenue growth of 25% over the next five years. It holds a market cap of $31.96 billion and an enterprise value of $31.71 billion. 

The credit goes to the company's focus on AI application development. According to CEO Matthew Prince, “Cloudflare is the most commonly used cloud provider across leading AI start-ups.” He also asserted that the company is well-positioned to lead AI inferencing in the future.

If you want to maximize your long-term stock profits, Cloudflare may be a reliable investment option. Last year, it reported excellent financial results in the fourth quarter. In the short term, the stock could be volatile, but for patient investors, it promises strong returns.

Opportunity Stocks

When it comes to AI growth stocks, investors have often rushed into leading giants like Nvidia, C3.ai, Microsoft, and Amazon. However, there are a number of newer AI stocks in the market that are packed with potential and possibilities. One such overlooked example is Elastic NV, which witnessed a significant dip in March of this year. 

The Elastic NV or Elasticsearch AI platform works on the organization's internal data and creates generative AI experiences for employees and customers. With its innovative products and services, the company is all set to rule the market in the coming years. It generated $327.9 million in revenue in the third quarter of 2023, according to The Motley Fool. 

Elastic stock grew by 80% over the last year, but in March, it dropped 44% below its all-time high. The demand for AI combined with Elastic's recent acceleration in its quarterly revenue make it an attractive opportunity for investors.

Undervalued Stocks to Watch

AI growth stocks in smaller or lesser-known companies such as ServiceNow are often overlooked and yet to be discovered. ServiceNow, an innovative business in the AI age, offers organizations a platform to unify and digitize workflows across different systems. In the fourth quarter, ServiceNow's net revenue increased by 26% to $2.4 billion. 

Recently, ServiceNow, Inc. (NOW) introduced generative AI capabilities through Now Assist. ServiceNow Chairman and CEO Bill McDermott commented to BusinessWire, “Generative AI is injecting new fuel into our already high-performing engine. ServiceNow’s intelligent platform for end-to-end digital transformation is driving massive leaps in productivity and explosive growth.”

The company's strong financial outcomes and the increasing demand for generative AI indicate the potential for strong sales growth in the future. For anyone planning to invest for at least five years in high-returning AI growth stocks, ServiceNow presents a valuable option.

Conclusion

The market for AI growth stocks is quite volatile and can be subject to significant fluctuations. Keeping an eye on the latest market updates can help you make informed decisions about where to invest, but there are always risks involved. The outcomes are not guaranteed, and investors should always exercise caution and understand the tradeoffs when entering volatile industries. However, through careful research into market trends and expert advice, it is possible to make an informed investment decision that promises high returns in this quickly expanding sector. 

Sources

Stock Analysis

Investors.com

Forbes

The Motley Fool Stock Advisor

Yahoo! Finance

BusinessWire

Dan Nicholson is the author of “Rigging the Game: How to Achieve Financial Certainty, Navigate Risk and Make Money on Your Own Terms,” deemed a best-seller by USA Today and The Wall Street Journal. In addition to founding the award-winning accounting and financial consulting firm Nth Degree CPAs, Dan has created and run multiple small businesses, including Certainty U and the Certified Certainty Advisor program.

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