10 Best AI Stocks Of December 2023 (2024)

Nvidia is known for its graphics cards, but the company also produces microchips for autonomous driving cars and AI applications. Company CEO, Ginseng Huang, is positioning Nvidia to be at the forefront of bringing AI to every industry.

NVDA is the best-performing AI stock over the past year. While earnings growth over the last five years has been anemic at 5%, analysts expect much bigger yearly earnings growth over the next five years.

The company has a “B” financial health rating from Morningstar, and it is expected to grow EPS by 34% next year. This year earnings are also expected to take a massive jump. The current forward price-earnings ratio exceeding 40 is extremely high. That’s about double the S&P 500’s P/E of nearly 20. But Nvidia’s significant growth makes the forward P/E seem more reasonable.

As an added bonus, NVDA buys back shares. That helps bolster stock performance over the long run. It has a buyback yield of 0.8%. Buyback yield is the value of stock it purchases divided by the company’s market capitalization.

C3.ai provides software that allows its users to roll out AI applications on a large scale. In fact, it is one of the few pure-play AI stocks involved in directly creating AI projects.

The stock commenced trading in 2020, so it doesn’t have a long track record. However, AI’s stock has rallied over the past year, and it is tops in the industry for expected growth. Analysts predict significant average yearly EPS growth over the next half-decade.

The company may not yet have had a profitable year, but consensus estimates predict the company will turn profitable in 2025 (12 cents per share).

AI has some good qualities, but this stock is still highly speculative. Its short history means there are few metrics you can use to forecast its future fortunes. Despite the recent rally, it is still down considerably from its 2020 high. It has a “C” financial health rating from Morningstar.

UiPath creates software that allows business employees to tackle both complex and simple problems, including completing routine tasks. This saves businesses time and money.

The stock has outperformed all but two others on this list, as well as the S&P 500 Index, over the last year. The company has only been traded publicly for a few years, and it hasn’t posted a profitable year yet. That is expected to change in 2024, however, with analysts calling for a profit of 34 cents per share.

Because of its growth potential, PATH is worth considering, especially since it is trading well below its 2021 all-time high.

This all means, though, that with a financial health rating of “C” from Morningstar, PATH is a more speculative play.

PATH doesn’t have a current P/E since it is not yet profitable, but the forward P/E is more in line with many of the other high-growth potential AI stocks on this list.

As cybersecurity needs increase with advances in technology, Palo Alto is well-positioned. It provides network and cloud security for the same networks and clouds that many AI projects are built on.

The stock is an excellent performer in 2023, sharply rising and trading at an all-time high. It has a “B” financial rating from Morningstar.

The company hasn’t posted a profitable year yet, but it is on pace to score a profit of $4.27/share in 2023, according to analysts’ estimates. The next year EPS is expected to rise 17.3%. Even higher average growth is expected in subsequent years.

Since the company is just moving into profitability, the P/E ratio is high. Forward P/E is more reasonable but still pricey. However, if earnings can reach $10 per share in several years, the current price relative to those earnings is 25:1. That’s what investors are betting on.

PANW also has a steady history of buying back shares. The current buyback yield is 0.8%.

Amazon doesn’t just sell products on its website. It is also heavily involved in cloud computing and data storage. In that way, the company provides a platform for building, training and deploying AI projects. AMZN also offers Alexa and Echo, AI-powered software and products that can answer questions through voice recognition and data retrieval.

Amazon has struggled to keep growing earnings in recent years. But it makes our list because analysts expect that to change over the next five years. The stock lost nearly half its value in 2022, but it is bouncing back in 2023 as earnings recover.

The stock is still not cheap. It trades at a high P/E, but the forward P/E is more reasonable. Earnings next year are expected to grow by 63.3%.

Amazon has also started buying back shares. The buyback yield is 0.3%.

Synopsys provides design automation software for microchip makers.

The company offers an excellent combination of recent earnings growth, expected future growth and a long-term uptrending stock price. It has the strongest earnings growth over the last five years of all the stocks on this list.

Analysts expect 13.8% EPS growth next year and the company has an “A” financial health rating from Morningstar. Share buybacks have also helped bolster the share price. The current buyback yield is 1.4%.

Like many of the stocks on this list, SNPS is trading at a high P/E. Forward P/E is much more reasonable based on expected future earnings.

Cadence Design Systems provides automation software for microchip manufacturers. Its process is used in fields such as AI, machine learning and 3D technology.

The stock has performed well in 2023, trending higher, and it is near an all-time high set earlier this year.

It has an “A” financial rating from Morningstar and has seen impressive growth in earnings. Analysts expect strong yearly growth over the next five years, and 15.7% EPS growth next year.

The current P/E is relatively high, but when factoring for earnings growth the forward P/E is more reasonable for a high-growth stock.

The company has been buying back shares. The buyback yield over the last year is 1.4%. The company bought back shares every year since 2014.

Microsoft has been rolling out AI projects, such as its more intuitive search engine, and it is even working on its own AI chip.

As one of the largest companies in the world, MSFT is a less speculative AI play than some other names on this list. It has an “A” financial health rating from Morningstar.

Earnings growth over the last five years has been impressive. That growth will slow, but it is likely to remain robust over the next five years. Next year, analysts expect 13.5% EPS growth.

The current P/E and forward P/E are typical of technology companies with solid growth that is expected to continue.

MSFT pays a dividend of 0.8% and bought back 0.9% of shares in the last year.

KLA makes process monitoring and diagnostic systems for the semiconductor industry. Semiconductors are key components in computer power for AI projects.

The stock has trended aggressively higher in 2023, and it is now trading near an all-time high. Its earnings and sales have steadily grown over the past few years, but that growth is expected to slow over the next half-decade.

Next year, analysts expect a decline in earnings of 15.5%. For that reason, it is more value-priced than many of the stocks on this list.

The company has been aggressively buying back its shares. The buyback yield is 5.1%. It pays a dividend of 1.1%, and the dividend has steadily increased each year. It has a “B” financial health rating from Morningstar.

Google has been using AI in its search engine, apps and the Google Nest for a long time.

While its stock performance has lagged behind the S&P 500 this year, GOOGL provides excellent earnings growth, and that is expected to continue for the next half-decade, according to analysts. Next year, EPS is expected to grow 17.9%.

GOOGL has an “A” financial health rating from Morningstar, and it is trading at a forward P/E that is considerably cheaper than many of the other stocks on this list.

Also, with a buyback yield of 4%, Google has been buying back shares aggressively.