The Top 3 AI Stocks to Buy in March 2024
Artificial intelligence (AI) has been a key sector within the stock market. Many investors have poured their capital into the top AI stocks to buy, but there is plenty of risk. The technology is innovative, but corporations have been rushing to mention artificial intelligence initiatives. Many investors have gobbled up those mentions, but not every AI initiative will pan out.
Artificial intelligence can enhance a company. However, the technology is extremely unlikely to fix unprofitable companies or firms that have been slowing down for years. With that in mind, there are still great AI stocks available. These are some of the top AI stocks to buy now.
Microsoft (MSFT)
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Microsoft (NASDAQ:MSFT) has fully positioned itself to capitalize on the artificial intelligence boom. The company made big investments in OpenAI before the technology became mainstream. Microsoft also recently wrapped up another AI investment to increase its diversification.
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The company isn’t only invested in artificial intelligence. Microsoft’s key growth driver has been Microsoft Cloud. That segment experienced 24% year-over-year revenue growth in Q2 FY24 and attributed to more than half of the company’s total revenue.
Microsoft also has exposure to gaming, which was boosted by the Activision Blizzard acquisition. The tech giant should continue to expand its market share in the industry. Advertising, social media, and business software offer additional opportunities.
Long-term investors have enjoyed high returns over the years. Shares have gained by 69% over the past year. The stock is up by 269% over the past five years and has already started the year strong with a 12% year-to-date gain.
Nvidia (NVDA)
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Nvidia (NASDAQ:NVDA) is the leading company in the artificial intelligence boom. The firm’s earnings reports are enough to move the entire stock market. Good earnings indicate the AI boom is still strong, while a bad earnings report can create panic among investors exposed to AI stocks.
Luckily for investors with skin in the game, Nvidia has continued to post robust earnings. The latest earnings report indicated 265% year-over-year revenue growth and 491% year-over-year net income growth in Q4 FY24. Revenue and net income growth exceeded the stock’s 262% gain over the past year. Shares are up by approximately 2,000% over the past five years.
Nvidia’s chips are the key component of many artificial intelligence innovations. The technology requires significant computing power, and Nvidia is by far the largest chipmaker in the industry. The company has other vibrant business segments, such as its gaming and professional visualization divisions.
Nvidia is a big name in artificial intelligence, but you don’t always have to search for under-the-radar stocks to find success as an investor.
Dell Technologies (DELL)
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Dell Technologies (NYSE:DELL) shares have more than tripled over the past year as the artificial intelligence connection becomes more tangible. The company’s Q4 2023 earnings report hinted at what’s possible. Although revenue was down year-over-year, diluted earnings per share jumped by 89% year-over-year.
Dell’s AI-optimized server orders increased by nearly 40% quarter-over-quarter and total backlog nearly doubled. That’s the big storyline that prompted a 30% post-earnings surge.
Another significant development was the company’s decision to hike its dividend by 20%. That’s a number you can’t fake since it’s cash leaving the company’s coffers and ending up in shareholders’ hands. The annual dividend now stands at $1.78/share after the 20% bump.
Dell’s valuation isn’t overstretched like other AI server stocks. The firm has a 34 P/E ratio and a 17.64 forward P/E ratio. It has a greater margin of safety and offers steady cash flow just for holding onto the stock.
On this date of publication, Marc Guberti held long positions in MSFT and NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.
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