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The AI Stocks Showing An Edge In Their Sector

Analyst Team trader
Updated 4 Jun 2024

Investors eager to capitalise on the latest technological advancements are increasingly turning their attention to the field of Artificial Intelligence (AI). With industries across the board seeking to integrate AI into their operations, certain companies stand out with promising potential. Attention is firmly being sought at Computex 2024, as tech giants from around the globe jostle for position in sharing their latest and greatest innovations set to come off production lines.

With all the noise, it can be increasingly difficult to get down to the basics of where each company has an edge. Not all companies in the sector do the same thing of course and AI is now no longer a buzzword, but something that is having a real impact across various types of businesses.

Where the technology had gained some significant visibility in the field of conversational, or generative AI early after ChatGPT hit the market; areas such as marketing, data analysis, data centre infrastructure and the chips required to process these advanced systems all represent areas that are benefiting from the boom. To help trim the big list into a shortlist, here at we are taking a quick look at some of the AI stocks to have been making headlines and shining through the noise.

Conversational and Generative AI

At the forefront of AI breakthroughs are conversational assistants like OpenAI's ChatGPT and Microsoft's Copilot. As businesses and consumers alike seek more intuitive and efficient ways to interact with technology, these AI-driven platforms are rapidly gaining popularity.

Microsoft's investment into OpenAI signifies the importance of conversational AI in the market, with applications spanning numerous sectors, from customer service to software development. After Microsoft were the first to market with Bing using AI, and being a heavy investor in OpenAI, these two names are those that have hit most headlines in the field.

Data Analysis

Palantir Technologies, widely recognised for its advanced AI data-analysis solutions, has secured a diverse client base, ranging from General Mills to the U.S. military.

Offering sophisticated tools for big data analytics, Palantir is well positioned to cater to the increasing demand for data-driven decision-making. The company is poised for growth, with revenue projected to rise by 21% this year and next, indicating a bullish outlook for its stock performance.

The past 12 months have delivered upside for holders of Palantir stock (NASDAQ: PLTR) of 39.9%, reflecting a huge shift in momentum after their post IPO jitters.

AI-Processors Have a Dominant Name

In the hardware domain, Nvidia is a dominant player controlling approximately 90% of the AI-processor market. With its rigorous focus on AI and machine learning, Nvidia provides crucial data centre infrastructure that powers the latest AI applications, making its role in the market indisputable.

The Nvidia’s continued innovation, market share, and sentiment surrounding the stock (NASDAQ: NVDA) will likely result in the company overtaking Apple in the very near future on market cap.

Super Micro Computer's Remarkable Revenue Growth

Super Micro Computer has reported a staggering 200% surge in revenue last quarter, emphasizing its importance in manufacturing AI data centre computers. Analysts are forecasting a 60% revenue growth for the company in the upcoming fiscal year.

This impressive trajectory highlights Super Micro Computer stock (NASDAQ: SMCI) as a potentially lucrative opportunity for those looking to invest in companies facilitating AI infrastructure.

Integration in Advertising – Who Else?

Alphabet, Google's parent company, has been effectively incorporating AI into its advertising business to streamline and enhance operations. High-profile analysts like Justin Post of Bank of America and Eric Sheridan of Goldman Sachs have expressed optimism about Alphabet's AI initiatives even if not all have been so kind. They predict that advertising will remain Alphabet’s primary revenue source, further securing its positioning within the AI space.

Those considering Google shares as an investment will need to look for the parent company Alphabet, which trades under ticker NASDAQ: GOOG. The stock has added 37.74% in the past 12 months, and remains a staple of many long term portfolios. Naysayers to the firm have raised concerns about revenue generation in the universe where an AI driven Search is more prominent, potentially eliminating some advertising streams, but recent performance has largely silenced these for now.

The AI infrastructure market is expected to see over 27% annual growth through 2033. This robust growth underscores the long-term potential of investing in companies that are pioneering AI infrastructure development.

With the industry very much still on an upward trajectory, key players are contributing unique value to the burgeoning market, whether through software, data analytics, hardware, or integrated services. Whichever way you see the current AI boom playing out, there is likely a company out there for you, even if that company is a contrarian play.

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The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.