Artificial intelligence (AI) has been the dominant investment theme so far this year. Given how it can (and will) revolutionize so many businesses, that’s no surprise. It’s also no surprise that investors are looking for the best artificial intelligence stocks of 2023.
Put simply, they want AI stocks with huge upside potential. While we’re only four months into 2023, many tech stocks with AI exposure have already seen monstrous gains. However, that doesn’t mean they won’t continue to build out these new revenue streams, nor does it mean there aren’t other AI stocks to buy and hold.
When we dive into tech, there are actually a ton of stocks getting involved in this space. Everything from mega-cap tech to obscure companies we’ve never heard of.
With that, let’s look at a few of the top AI companies to invest in.
Microsoft (MSFT)
It’s impossible to ignore Microsoft (NASDAQ:MSFT) at this juncture in the AI arms race. CEO Satya Nadella continues to use Microsoft’s cash flow and balance sheet to keep building out growth pipelines. Whether it’s with gaming, the cloud, or now AI.
When ChatGPT burst onto the scene this year, it quickly enamored investors and the public alike. Now, it boasts more than 100 million monthly active users, while its parent company OpenAI has accepted a multi-billion investment from Microsoft. The company is incorporating that AI technology into its search platform, browser and enterprise products.
Nadella has said, “It’s a new race in the most important software category, or the largest software category, in search. Let’s face it … Google dominates it. We are thrilled to be here launching Bing to compete.”
The company is fresh off a top- and bottom-line earnings beat, where it announced strong results. Expect AI to accelerate some of the growth rates in Microsoft’s business.
Alphabet (GOOG, GOOGL)
Another company that just reported a top- and bottom-line beat? Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). However, the company is getting completely dragged in the financial media when it comes to its AI ambitions. It feels like almost nobody is talking about Alphabet as one of the best AI stocks of 2023.
However, when it comes to picking AI stocks for long-term growth, Alphabet has to be on the list. But first, let’s talk about the short term.
Earnings of $1.17 a share beat analysts’ expectations by 10 cents a share, while revenue of $69.8 billion coasted by consensus estimates by almost $1 billion. Further, the company announced an additional $70 billion buyback, as its immense balance sheet and robust cash flow continues to drive gains.
Yet no one seems to care. All the talk is about AI, ChatGPT and Microsoft. Nobody seems to remember that — in the words of Microsoft CEO Satya Nadella — “Google dominates” search. Google.com is the No. 1 website in the world, followed by YouTube.com at No. 2.
Alphabet’s top-two properties will not disappear overnight. While the search race may heat up, my hunch is that Google will have a robust AI platform of its own.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) is a popular AI pick. As someone who has been championing Nvidia for years, it’s hard not to include it on this list. That’s especially true when talking about the best AI stocks of 2023.
This name has been off to a robust start, sporting year-to-date gains of 88%. From the 2022 low, shares are up more than 150%. That doesn’t mean that Nvidia stock won’t pull back — in fact, it probably will pull back — but its role will be cemented within the AI space.
This company has been working toward AI for years now, and CEO Jensen Huang has been talking about it for quite some time.
Many investors seem to think of AI in terms of internet search and/or ChatGPT-like platforms. That’s not the only case, though. AI can be used to boost crop yields in the agriculture space, identify maintenance issues in the energy space, and analyze medical scans to efficiently screen for diseases in healthcare. Not to mention what it can do in technology, the cloud, logistics and other industries.
Powering all of that will be Nvidia, with its super-powered GPUs and superb software.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.