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Google, Nvidia, and Amazon are some of the best AI stocks that you can buy — but there plenty more to consider. This article identifies and analyzes the nine best AI stocks on the market.
Best AI Stocks: Background
Artificial intelligence is a branch of computer science concerned with building smart machines capable of performing tasks that typically require human intelligence.
Machine learning (ML) and deep learning (DL) are subsets of AI that use algorithms and neural networks to mimic human intelligence.
While the idea of AI has been around since the 1950s, progress in algorithms, computing hardware, and accessible data have fueled the AI renaissance.
Let’s look at the companies that are leading the charge.
Best AI Stocks: Overview
Here’s a quick look at the best AI stocks:
- Google (GOOG)
- Nvidia (NVDA)
- Amazon (AMZN)
- CrowdStrike (CRWD)
- Meta (FB)
- Microsoft (MSFT)
- Salesforce (CRM)
- Taiwan Semiconductor (TSM)
- Palantir (PLTR)
Let’s examine each of these in more detail.
Best AI Stocks: Analysis
#1. Google (GOOG)
More than just a search engine, Google is the world’s premier artificial intelligence company.
Google funds AI projects all over the globe by leveraging its hundred-billion-dollar advertising business.
Here’s a glimpse into Google’s most popular (and secret) AI projects:
- Waymo: self-driving cars
- DeepMind: a 3D platform to develop ML and AI systems
- TensorFlow: open-source ML platform
- AdaNet: ensemble learning with neural networks
- Dopamine: prototyping of reinforcement learning algorithms
- Bullet Physics: robotic simulations, game development, and ML applications
- Magenta: generates art and music with DL
- Kuberfllow: ML toolkit for Kubernetes
- Open Images Database: computer vision
- Google Dialog Flow: conversational AI
- DeepVariant: next-generation DNA sequencing
- MentorNet: very deep neural networks
- SLING: natural language parser
These projects pull the best developers and engineers into Google’s ecosystem.
The benefits of this flywheel do not exist in a vacuum — cloud computing experts believe that Google Cloud is “the market’s fiercest challenger” because of the way that customers can access and engage with Google engineers for co-development.
While Google Cloud controls just 9% of the cloud infrastructure market, this dynamic is causing more AI- and ML-focused companies to choose it over AWS and Azure.
Google is an index fund for the future.
#2. Nvidia (NVDA)
Nvidia is a pick-and-shovel play on the future of AI — it manufactures graphic processing units (GPUs) and systems on a chip unit (SoCs) for the professional markets.
Deep learning algorithms require massive amounts of computational power, which is supplied by Nvidia’s GPUs.
GPUs perform the rapid mathematical calculations that are necessary for high-performance computing.
High-performance computing powers companies from all industries, such as autonomous driving, mobile gaming, data centers, cryptocurrency mining, and cloud computing, among many others.
Even the most technologically capable companies are happy to outsource GPU production to Nvidia.
This is why many investors consider Nvidia to be amongst the best semiconductor stocks on the market. The company’s total addressable market is massive and it grows by the day.
Companies like Google, Amazon, and Microsoft rely on Nvidia’s products to bring their innovation to life.
#3. Amazon (AMZN)
Everyone knows Alexa, but Amazon uses artificial intelligence in all aspects of its business, from cloud computing to product suggestions, to optimizing its logistic network.
For example, Amazon uses AI to better understand its customers’ search queries.
It’s not only interested in putting more relevant products in front of the consumer but also why a user is searching for a specific product.
Amazon deploys ML algorithms to determine the context and intention behind a given search — yes, Amazon is customer-obsessed.
Additionally, Amazon has hundreds of thousands of robots working in its fulfillment centers around the clock.
To further improve the efficiency of its supply chain, Amazon is opening a state-of-the-art robotics innovation hub in Boston, MA. This allows Amazon’s Robotics team to design and manufacture robots under one roof.
Finally, there’s AWS — arguably the best business in the world.
Amazon Web Services uses pre-trained AI Services to provide ready-made intelligence for its customers’ apps and workflows.
AWS helps over a hundred thousand customers accelerate their machine learning capabilities, directly pulling forward growth in the AI space.
#4. CrowdStrike (CRWD)
CrowdStrike is a cybersecurity company that uses artificial intelligence to deliver cloud-based cyber protection.
Unlike other cyber firms that respond after an attack, CrowdStrike uses AI and ML to stop the breach before it happens, a strategy that has flipped the traditional cybersecurity model on its head.
CrowdStrike’s proprietary “Threat Graph” collects data and uses AI/ML to update its defense protocols instantaneously.
The more data the Threat Graph collects, the smarter the AI becomes.
This results in a unique dynamic where CrowdStrike’s product improves as it gets more customers.
Put simply, CrowdStrike is a blue-chip cybersecurity stock. It’s leading a sector that is experiencing significant tailwinds.
The frequency and severity of cyber-attacks will continue to escalate as digitization scales — expect CRWD to follow.
#5. Meta (FB)
Meta is an under-the-radar pioneer in AI research — Mark Zuckerberg’s ambitions extend beyond a social media platform.
Back in 2017, researchers at Facebook AI shut down AI bots that started speaking in a language unintelligible to humans.
This was a glimpse into the singularity, a hypothetical point in time at which technological growth becomes uncontrollable and irreversible, resulting in unforeseeable consequences to human civilization, according to Amnon H. Eden.
While Artificial Super Intelligence (ASI) maybe decades (or centuries) away, Facebook uses several forms of Artificial Narrow Intelligence (ANI) today.
Here’s how Meta is using AI:
- Algorithms to detect hoax content and deep fakes
- DL engine DeepText to process written words as they’re used on the platform
- Testing recommended responses in Messenger with Natural Language Processing (NLP)
- Image identification with DeepFace AI
- Personalizing NewsFeeds by predicting which content a given user is most likely to engage with
- Meta Quest initiatives
- All things related to the metaverse
Meta faces bi-partisan criticism regarding disinformation and censorship on its platform.
Changes to Section 230 might cause the company to adjust its algorithms accordingly, impacting its bottom line.
Regardless, we expect Meta to do what is best for business and shareholder value.
#6. Microsoft (MSFT)
Microsoft’s shift to cloud computing has paid off — Azure enjoys a 20% share of the booming cloud market, right behind AWS at 32%.
Similar to AWS, Azure brings AI and ML to the everyday business. Azure AI is a portfolio of AI services designed for developers and data scientists.
Companies in fields like medicine, robotics, and language, among others, are creating their own ML models with Azure.
Additionally, Microsoft is facilitating the push towards Artificial General Intelligence (AGI), or the hypothetical ability of an intelligent agent to understand or learn any intellectual task that a human being can.
Microsoft ponied up $1 billion to be the exclusive cloud provider for Elon Musk’s OpenAI, an AI research and deployment company.
Microsoft will exclusively license GPT-3, OpenAI’s groundbreaking auto-generating text program.
#7. Salesforce (CRM)
Salesforce is a cloud-based software company that provides customer relationship management (CRM) tools for businesses.
Salesforce uses AI tools to collect and analyze vast amounts of customer data across all channels, then process that data to learn insights, predict outcomes, and recommend or perform the next steps for the customer.
What does that actually look like? Here are some examples:
- Analyze information from email and calendars to proactively recommend actions like the best email response to move a deal forward (ML Sales)
- Intelligently score the likelihood of a customer to open an email or make a purchase (ML Sales)
- Analyze product images attached to a deal and use that info to suggest the best upsell and cross-sell opportunities (DL Sales)
- Analyze images across Facebook and Twitter to suggest the best visuals for an upcoming advertising campaign (DL Marketing)
Salesforce makes businesses smarter, which isn’t possible without artificial intelligence.
#8. Taiwan Semiconductor (TSMC)
Taiwan Semiconductor manufactures the computing hardware that makes advancing AI possible.
Like Nvidia, TSMC is a pick-and-shovel investment in the future of AI, but to an even larger degree. In fact, Nvidia gets its chips from TSMC.
According to TSMC, the company is well-positioned to supply the most advanced AI hardware to its customer’s thanks to its leading-edge logic, memory, and packaging technologies.
TSMC has also established a research pipeline to pull the industry forward, focusing on AI devices, circuits, and systems.
Here are TSMC’s main research areas:
- Near-memory computing
- In-memory computing
- Embedded non-volatile memory technologies
- 3D integration
- Error-resilient computing
But where there are chips, there are geopolitical tensions.
Big Tech companies like Apple (AAPL) are trying to hedge these unknowns by creating their own chips, a trend that would affect TSMC long-term.
#9. Palantir (PLTR)
Palantir is a software company that lets organizations integrate their data, decisions, and operations into one platform.
Palantir’s commercial platform offering “Foundry” makes machine learning operational by connecting models to the real-world decisions they inform instead of existing in non-actionable, experimental vacuums.
Palantir uses AI/ML algorithms for predictive analysis — it lets individuals at all levels of an organization (assembly line to C-suite) understand the potential outcomes and side effects of a decision before they execute on that decision.
For much of its 17-year history, Palantir exclusively served the public sector, but this is beginning to change.
Palantir is aggressively booking more commercial gigs to address a “$119 billion total addressable market.”
Best AI Stocks: Honorable Mention
As you can see, the FAAMG stocks are leading the AI renaissance. But nearly every modern company uses or benefits from AI in some way.
Here are other noteworthy names in the AI space:
- Intel (INTC)
- C3.ai (AI)
- Snapchat (SNAP)
- Applied Materials (AMAT)
- Netflix (NFLX)
- Twitter (TWTR)
- Spotify (SPOT)
- Square (SQ)
- PayPal (PYPL)
- Roblox (RBLX)
- Shopify (SHOP)
- Tesla (TSLA)
- Visa (V)
Bottom Line: Best AI Stocks
It’s not obvious which phase of the Gartner Hype Cyclewe’re in regarding artificial intelligence — exponential technology can advance at an unpredictable rate.
Regardless, these are the companies that will unlock AI’s full potential.
This article is for informational purposes only, and it is not intended to be investment advice. Read our editorial guidelines and public equities research methodology to learn more about how we selected the best AI stocks. This article was updated on May 5th, 2022 to reflect the changes in performance and characteristics of each stock.