Stocks to buy

With the sudden influx of protocols based on artificial intelligence, it’s only natural to ask one question: which are the top AI leaders so that daring investors can profit? According to Grand View Research, the global AI market size reached a valuation of $136.55 billion in 2022. From this year till 2030, experts project that the segment will expand at a compound annual growth rate (CAGR) of 37.3%.

At the culmination of the forecasted period, the top AI companies can help sector revenue hit slightly over $1.81 trillion. Therefore, investors should at least consider positioning themselves in relevant artificial intelligence stocks. Below is an eclectic list of enterprises that can benefit from this latest innovation.

Artificial Intelligence: Microsoft (MSFT)

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A rather obvious idea for artificial intelligence stocks to buy, computer software and hardware giant Microsoft (NASDAQ:MSFT) pushed the needle forward in the AI department with its integration of popular chatbot ChatGPT into its ecosystem. In particular, Microsoft’s incorporation of ChatGPT into its Bing search engine should significantly help boost relevance.

On many levels, it really comes down to simple math. As you know, Bing falls well behind in terms of market share for the global search engine space. At last count, it holds less than 3% of global share, which frankly stinks. However, with ChatGPT’s intuitive question-and-answer format (via normal human language), the move should accelerate Bing’s lowly position to somewhere significantly higher.

Financially, you’re looking at a stalwart with a stable balance sheet, strong revenue and even stronger profitability. Therefore, it’s one of the top AI companies that should be around for a long time. Finally, analysts peg MSFT as a consensus strong buy. On average, their price target lands at $300.97,  implying over 4% upside potential.

Artificial Intelligence: Alphabet (GOOG, GOOGL)

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With rival Microsoft aggressively moving into the AI space, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) clearly has some catching up to do. Nevertheless, GOOG should rank among the top artificial intelligence stocks to buy. Sure, the current circumstances don’t seem to bode well for Alphabet’s Google ecosystem. In my opinion, however, both Microsoft and Alphabet can easily coexist.

Having used the ChatGPT platform for some time, it’s incredibly useful for narrowing down research parameters. However, once you’ve identified a path to take, Google arguably offers a more viable solution for additional research. By offering multiple choices (when available), Google forces the human operator to consider the value of the information presented.

The issue I have with chatbots is that they attempt to do the thinking for you. But as the rise of misinformation confirms, significant demand exists for quality and accurate information. I’m afraid chatbots just aren’t there yet. In the meantime, you can rest assured that analysts peg GOOG a unanimous strong buy. Their average price target stands at $126, implying over 18% upside potential.

Artificial Intelligence: IBM (IBM)

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One of the underappreciated AI firms and tech enterprises overall, IBM (NYSE:IBM) has been building for a time such as this. Admittedly, “Big Blue” struggled under the increasingly onerous weight of its legacy businesses in the past. However, that’s exactly where it is – in the past. Moving forward, IBM represents one of the more compelling artificial intelligence stocks thanks to its myriad business units.

Most prominently, IBM ranks among the AI leaders for its IBM Watson applications. Featuring attributes such as natural language understanding and speech-to-text protocols, Watson delivers intuitive solutions. As well, the technology enables IBM’s enterprise-level clients to scale up appropriately based on business dynamics.

Another factor that will almost certainly help in the investment realm is the company’s passive income. Currently, Big Blue carries a forward yield of 5.16%, well above the tech sector’s average yield of 1.37%. Also, it commands 29 years of consecutive annual dividend increases.

Lastly, analysts peg IBM as a consensus moderate buy. Their average price target hits $146.70, implying nearly 15% upside potential.

Toyota (TM)

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Typically, when you think of Toyota (NYSE:TM), you’re thinking about reliable cars, not necessarily about artificial intelligence stocks to buy. However, this perception may change – and quite soon. For those in the know, Toyota ranks among the top AI companies. Over the years, the automotive giant made significant investments in AI-based solutions such as machine learning.

Notably, Toyota worked with other companies to use AI and ML to predict demand for taxi service while also considering influencers such as smartphone data and weather conditions. Moving forward, Toyota can help push automated mobility and transportation through its advanced tech acumen.

As well, CNBC recently reported that the day for $25,000 electric vehicles will soon arrive. Therefore, by researching AI/ML automotive applications now, Toyota can be in a position to offer compelling products later. Within the past 90 days, no one covers TM. However, BofA Securities’ Kei Nihonyanagi rated shares as a buy, with a $171.57 price target implying almost 25% upside potential.

Nvidia (NVDA)

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As one of the world’s top semiconductor specialists, Nvidia (NASDAQ:NVDA) easily ranks among the top artificial intelligence stocks to buy. Enticingly, Nvidia gained fame through its class-leading graphics processing units (GPUs), which often find homes among top gamers. Now, as video games become more advanced, they incorporate AI to simulate realistic behaviors. All this requires intense processing power, which Nvidia naturally helps feed.

In addition, Nvidia’s AI and ML protocols may usher in true automation regarding mobility and transportation. Further, Nvidia’s processors should undergird other enterprises’ efforts at industrial automation. With the company command decades of acumen developing solutions for intensive computer applications, NVDA should benefit.

Currently, the company owns a solid balance sheet, along with blistering revenue growth and robust profitability metrics. About the only issue is that shares might be overvalued.

Nevertheless, that didn’t stop Wall Street analysts from pegging NVDA as a consensus strong buy. Their average price target stands at $287.03, implying over 6% upside potential.

Disney (DIS)

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When you think about Disney (NYSE:DIS), you’re either thinking about its entertainment library or its political battle with Florida Governor Ron DeSantis. However, over time, investors might regard the Magic Kingdom as one the AI leaders. That’s right – in addition to ticking off certain public officials, Disney ranks among the artificial intelligence stocks to buy.

Fundamentally, AI protocols should help the House of Mouse because entertainment firms spend billions on content and events. However, humans can be fickle. An initiative – no matter how bright and attractive – can always fail. If and when they do, that can cause devastating losses for those funding the projects. Therefore, artificial intelligence can help cut down on those mistakes.

Here, Disney has explored Affective AI, an emerging tech which seeks to detect and analyze human emotional states. Through this platform, Disney can guide its content narratives to their most effective (i.e. profitable) outcomes.

Presently, analysts peg DIS as a consensus strong buy. Their average price target stands at $128.33, implying 28% upside potential.

Lemonade (LMND)

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An insurance technology specialist, Lemonade (NYSE:LMND) features plenty of potential but also plenty of risk. Nevertheless, as machines get smarter, Lemonade could easily stand among the best AI firms. Already, it’s one of the intriguing artificial intelligence stocks thanks to the company’s data-driven approach to delivering insurance products to its customers.

Moving forward, the use of data for providing services will become a necessity. For one thing, computers can think faster than humans. Rifling through myriad datapoints and variables, Lemonade can almost instantly provide insurance programs through its app.

Second and more importantly, the rise of awareness toward social inequities undergirds the need for unbiased platforms. Theoretically, you can’t get any more unbiased than a non-human protocol. Still, LMND presents risks. Since the beginning of the year, shares declined over 4%. In the trailing one-year period, they’re down almost 42%.

Plus, analysts peg LMND as a consensus hold. However, their average price target stands at $19.21, implying over 46% upside potential.

On the date of publication, Josh Enomoto 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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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