of S&P500 It recently hit new all-time highs, suggesting a bull market is upon us. That means it’s a great time to bet on growth. Bull markets tend to favor growth stocks, and history shows that these market upswings last longer than bear markets, on average lasting nearly three years instead of nine months. So there’s a reason to load up now on stocks that have excelled in this kind of environment and could benefit from that momentum.
That’s why I’m focused on companies in the high-growth field of artificial intelligence (AI), from chipmakers powering their AI tools to companies using this technology to improve their operations. According to Fortune Business Insights, the AI market is expected to reach more than $2 trillion by 2030, with an average annual growth rate of about 21%. The companies you invest in today could benefit greatly in the future, and so can you. Here are the top 5 AI growth stocks to buy in 2024.
Image source: Getty Images.
1. Nvidia
Nvidia (NVDA -0.95%) These days, it is almost synonymous with AI. The company’s graphics processing units (GPUs) power the training of AI systems, or “deep learning” that can understand complex concepts and provide answers to questions.
According to analysts, NVIDIA has an 80% to 95% share of the AI chip market, and this share is unlikely to change anytime soon for two reasons. First, NVIDIA is currently the clear leader, so it may be difficult for rivals to attract customers from the industry’s “go-to” chipmakers. Second, Nvidia invests heavily in research and development (R&D), so innovation should also keep it ahead of the curve. In the most recent quarter, Nvidia’s R&D spending rose 18% to more than $2.2 billion.
Importantly, Nvidia’s investments are paying off, with its return on invested capital soaring recently.
NVDA Return on Invested Capital data by YCharts.
Nvidia’s revenue has increased over the past few years as it expands its dominance from GPUs to gaming and graphics enhancements to becoming a leader in AI. And the company’s profits improved. Considering Nvidia’s financial strength and AI market share, this stock is definitely an AI buy at this point.
2.Amazon
AI can help Amazon (AMZN 0.87%) It excels in both e-commerce and cloud computing businesses. The company has used his AI for e-commerce in everything from streamlining warehousing and fulfillment to helping customers find the right products. So this is where AI helps Amazon become more efficient and reduce costs. By providing a positive shopping experience, they’re more likely to come back again. This is a double win for Amazon’s bottom line.
When it comes to cloud computing, Amazon has developed several AI tools to offer to its customers. For example, with Amazon Bedrock, clients have access to a top-level foundational model that they can customize for their own use without having to build or manage infrastructure from scratch. Amazon Web Services (AWS) also offers Code Whisperer, a service that suggests code to developers and saves them valuable time.
Amazon said in its recent earnings call that as the global cloud market leader, AWS is best positioned to benefit in the coming years because generative AI is a “top priority” for its customers.
3. Moderna
moderna (mRNA -0.97%) It’s probably not the first company that comes to mind when you think of AI. After all, it is a biotechnology that develops vaccines based on mRNA technology. But Moderna may actually be a winner in the AI revolution, and it’s currently investing in technology to improve its chances.
Moderna is leveraging AI throughout its business and has even launched an “AI Academy” to train employees. But where AI has the potential to really change things is in drug development.
Moderna applies AI to explore relationships between vast amounts of data collected over years to produce better candidates.The company has also signed collaboration agreements with: international office machine (IBM) began using its own AI tools last year. For example, IBM foundational models help predict the properties of molecules, helping scientists quickly understand the properties of potential drugs.
The idea is that AI could help Moderna identify the best candidates more quickly, thereby speeding up the drug development process and bringing products to market sooner. This could be a win for Moderna, patients and investors.
4. Medtronic
medtronic (MDT 0.87%) Another potential winner of the AI market in healthcare. According to Grand View Research, this market is expected to reach $208 billion by 2030, up from $32 billion today. Like Moderna, Medtronic has also established an AI Center of Excellence focused on this hot technology.
The medical device giant has established a center of excellence to cost-effectively drive AI innovation across its business, with the goal of maintaining its leadership in AI-enabled healthcare. Medtronic already uses AI in many of its products, from its GI Genius endoscopic tool to its Touch Surgery Enterprise platform for AI-enabled surgeries. In other words, the company is on its way to becoming a major player in the AI revolution in healthcare.
In addition to this, you’ll also like the fact that Medtronic may be entering a new era of growth following its transformation plan to increase efficiency. In the most recent quarter, Medtronic reported growth across its business segments and regions. This performance is likely to continue, given that Medtronic’s products occupy his 1st to 3rd place in market share.
5. Alphabet
alphabet (GOOG 0.10%) (Google 0.21%)The parent company of search giant Google already has an impressive track record of growth, as seen in the graph below.
GOOG Net Income (Annual) Data by YCharts.
Now, AI may be set to provide a new boost. Searches on Google are about to get even better results thanks to Alphabet’s focus on this potentially game-changing technology. Alphabet recently announced Gemini, its most powerful AI tool to date. Gemini testing results in improved quality and speed in search.
Why is this important? Google is now by far the leader, accounting for more than 90% of the search market. Improving the functionality of Google Search should strengthen this leadership. As a result, advertisers should continue to flock to his Google. This is Alphabet’s biggest source of revenue, so it’s important to keep Google search at the top of the company’s game.
Alphabet plans to apply Gemini across its products, from smartphones to cloud computing products, so this AI investment should have a pretty big impact in terms of driving growth. That’s why Alphabet is the top AI stock to buy in this year’s new bull market.
