As the fourth month of the year comes to an end, artificial intelligence (AI) continues to be a key trend across many sectors. Providers of chips and other hardware or software necessary to power AI systems have seen significant gains in recent months. Major tech firms have scrambled to prioritize AI. Meta CEO Mark Zuckerberg recently emphasized his company’s major AI plans, and Apple (AAPL) is expected to reveal its AI strategy at its Worldwide Developers Conference in June. But while industry leaders have experienced huge rallies, gains have not been even across all AI firms. The Nasdaq CTA Artificial Intelligence & Robotics Index, a benchmark for the broader AI industry, is up 8.3% in the last year—not quite keeping up with the 12.57% improvement of the Russell 1000 Index.
Below, we explore the best AI stocks for May 2024, considering those with the best value, fastest growth, and most momentum. Data are current as of April 29, 2024.
Best Value AI Stocks
Value investing is a strategy based on the principle that some stocks trade at prices that are below their intrinsic value. Investors able to identify these stocks, usually through analysis of fundamental metrics, may be primed for a return on their investment when the market corrects the mispricing and the stocks rise. One such metric is the price-to-earnings (P/E) ratio. Lower P/E ratios are generally considered to be signs of a more attractively valued company since it is valued at less than its fundamental value.
| Best Value AI Stocks | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing P/E Ratio | |
| Cloud Consensus Solutions (CCSI) | 12.50 | 0.240 | 3.11 |
| JOYY Inc. ADR (YY) | 33.37 | 2.03 | 6.97 |
| Opera Ltd. (OPRA) | 14.49 | 1.27 | 7.61 |
- Cloud Consensus Solutions. This is a digital information company that provides cloud fax technology, with a scalable software-as-a-service (SaaS) platform and is now deploying artificial intelligence in the realm of data transformation. Founded in 2021, the company is based in Los Angeles.
- JOYY Inc.: This internet content and information company is based in Singapore and uses artificial intelligence to a greater degree as it evolves. The global technology company operates a number of innovative social media platforms, like Bigo Live, Likee and Hago.
- Opera Ltd.: Opera is a Norwegian web application developer that designs and builds web browsers for mobile phones and PCs. Last year, Opera added ChatGPT and free VPN functionality to its browsers.
Fastest-Growing AI Stocks
Investors often evaluate growth stocks based on revenue and earnings per share (EPS), as these are key measures of a company’s performance. Looking at only one of these two factors, however, can leave your search susceptible to temporary phenomena, including tax law changes or one-off gains.
We aim for a more balanced screen of AI growth stocks by looking at the most recent year-over-year percentage growth for both revenue and EPS, giving each equal weighting. We also exclude companies with growth rates in either category of 1,000% or more on the grounds that these are likely outliers.
| Fastest-Growing AI Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| NVIDIA Corp. (NVDA) | 877.57 | 2,190 | 586.45 | 265.28 |
| ServiceNow Inc. (NOW) | 721.16 | 147.84 | 378.34 | 23.33 |
| International Business Machines Corp. (IBM) | 167.43 | 153.49 | 352.54 | 2.45 |
- Nvidia Corp.: A chip manufacturer that provides computer graphics processors, chipsets, and related software, Nvidia was the best-performing stock in the S&P 500 for 2023, more than tripling in value during the year.
- ServiceNow Inc.: This company is a provider of enterprise cloud computing solutions. ServiceNow is best known for its cloud-based Now Platform. In March, ServiceNow launched Now Assist, a new set of AI capabilities for its platform.
- International Business Machines Corp.: IBM is a major tech firm offering an array of products and services through Software, Consulting, Infrastructure and Financing business lines.
AI Stocks With the Most Momentum
Momentum investing is based on the principle that stocks that have increased at a faster rate compared with the market or their peers are likely to continue on that trajectory, at least in the short term, as long as there aren’t fundamental changes to those companies’ operations or the broader industry.
Below, we look at the AI stocks that have provided the highest total return in the last 12 months.
| AI Stocks With the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Super Micro Computer Inc. (SMCI) | 890.35 | 52.13 | 804% |
| Applovin Corp. (APP) | 72.99 | 25.18 | 330% |
| MicroStrategy Inc. (MSTR) | 1292.97 | 21.94 | 313% |
- Super Micro Computer Inc.: This is a computing hardware company and a leader in the AI server market. On March 25, Super Micro was the best-performing stock on the S&P 500 after JPMorgan analysts issued a bullish rating and price target.
- Applovin Corp.: This company provides a platform for mobile app developers to create and market their apps as well as analytics and other related tools. Applovin launched an AI-based advertising engine, AXON 2.0, in 2023.
- MicroStrategy Inc.: MicroStrategy Inc. is a business solutions, cloud services, and mobile software company that has in recent years become the world’s largest corporate Bitcoin holder, with more than 214,000 tokens as of March 2024. MicroStrategy owns approximately 1% of all outstanding Bitcoin tokens.
Advantages and Disadvantages of Investing in AI Stocks
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Broad applications
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Fast-moving innovation
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Popular trend
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Industry uncertainty
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Untested companies
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Dangers of AI
Advantages of AI Stocks
Broad applications: AI has transformed—or has the potential to transform—a host of different industries and sectors. Companies positioned as leaders within the AI space could be well-positioned to benefit from widespread adoption and a broad, diverse customer base.
Fast-moving innovation: AI is at the forefront of innovation today, with both major tech firms and smaller up-and-coming companies working diligently to advance this technology. This means that the potential for breakthrough success may be huge as the industry continues to evolve.
Popularity: As of early 2024, AI is one of the most talked-about trends in technology. Interest in this space is very high, meaning that investors could be poised to benefit from tremendous momentum with the right investments.
Disadvantages of AI Stocks
Industry uncertainty: Although AI has been in existence for decades, it is only in the last several years that technological developments have brought this field into the mainstream. With changes and advancements happening incredibly quickly, it can be difficult for even the most knowledgeable investors to keep pace with what is happening in the industry. For instance, this means it could be easy for investors to get caught up in the hype surrounding a particular company after the ideal time to purchase that company’s stock.
Untested companies: While many of the major tech firms are involved in AI, other AI companies have little history and foundation for investors to consider when selecting investments. These companies may pose a greater risk than more stable, time-tested firms.
Dangers of AI: Leaders in computer science and related fields have warned of the potential dangers associated with AI. As the field continues to expand and change, public opinion, regulations, and other factors may change and have the potential to impact AI stocks in unexpected ways.
The Bottom Line
AI stocks present investors with the opportunity to tap into one of the most popular—and potentially most revolutionary—technology trends today. With companies across virtually all industries and sectors exploring ways to integrate AI into their operations, firms that are focused on the hardware and software required to run AI programs stand to benefit. But there are significant risks to investing in AI stocks, including the uncertain future of the industry and the potential dangers of AI technology itself.
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As of the date this article was written, the author does not own any of the above securities.