Top AI Stocks to Consider Buying Now
Learn about the emerging group of artificial intelligence (AI) stocks called the 'AI Five' and why investors should consider buying them.
Introducing the 'AI Five'
Wall Street has a history of grouping top-performing stocks together to separate them from the rest of the market. In 2017, the acronym 'FAANG' was coined to describe the five largest technology companies at the time. In 2023, the 'Magnificent Seven' took the spotlight. Now, one analyst is urging investors to focus on a new group of stocks he calls the 'AI Five.'
The 'AI Five' consists of companies that are heavily involved in developing the hardware and software necessary to bring artificial intelligence to life. These stocks have the potential for significant growth and are worth considering for investment.
Advanced Micro Devices (AMD)
Advanced Micro Devices is one of the best semiconductor stocks to own in 2024, especially in the AI space. Their new MI300 data center chips are designed to process AI workloads and are direct competitors to Nvidia's H100, the industry leader.
AMD offers two configurations of their MI300 chips: the MI300X, which is a pure graphics processor (GPU), and the MI300A, which combines GPU and CPU hardware to create the world's first accelerated processing unit (APU) for data centers. The MI300A is expected to power the El Capitan supercomputer, making it one of the most powerful in the world. With major data center operators looking for alternatives to Nvidia due to supply constraints, AMD is well-positioned to capture a significant market share.
Broadcom (AVGO)
Broadcom may not be as glamorous as companies like AMD and Nvidia, but it shouldn't be overlooked. Through a series of acquisitions, Broadcom has become a conglomerate that includes Avago, CA Technologies, Symantec, and VMware. These acquisitions have given Broadcom a strong presence in the AI industry.
One of Broadcom's key assets is VMware, which provides software for running virtual machines and optimizing cloud infrastructure. As companies race to access AI data center infrastructure, optimization becomes crucial. Broadcom itself is a leader in networking and server connectivity solutions, and they have developed the Tomahawk 5 switch, designed to accelerate AI and machine learning workloads. With steady revenue growth and a favorable price-to-earnings ratio, Broadcom is a promising AI stock to consider.
