Stocks to buy

As we ride the crest of a technological revolution, investors have set their sights on the top AI stocks to watch.

The AI boom has already set some companies soaring, yet plenty is warming up their engines. The AI sphere is ablaze with activity, but we’re still in the early chapters of a riveting story.

With each passing day, the once far-off idea of intelligent machines feels more tangible. Computers can now analyze data and make real-time decisions independently, pointing to a massive leap in technological advancement.

Whether it’s defense, education, energy, finance, or other sectors, the transformative touch of AI is just the beginning.

Indeed, this potential makes the must-watch AI stocks an exciting prospect for investors. With that said, here are seven of the top AI stocks to watch.

NVDA Nvidia  $426.92
UPST Upstart $37.27
SOUN SoundHound AI $3.34
THNQ ROBO Global Artificial Intelligence ETF  $36.73
ANET Arista Networks $157.79
BIDU Baidu $145.11
QCOM Qualcomm $122.68

Nvidia (NVDA)

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Nvidia (NASDAQ:NVDA) is a juggernaut in the realm of high-performance graphics and video-processing chips but has made significant strides in high-end computing, AI and virtual reality. The firm’s valuation shot up to the $1 trillion mark, cementing its solid position in the space.

The company’s stock saw a significant boost following its earnings announcement on May 24. Nvidia provided forward guidance that was 50% higher than analysts’ consensus forecasts, mainly driven by the growing demand for its chips among AI companies.

With the proliferation of AI, expect the company to continue posting such robust numbers ahead.

At a recent conference, Nvidia introduced several innovative AI workflows. It also announced updates to Riva, its speech AI platform, and Morpheus, its cybersecurity platform. These innovations from Nvidia underscore its leading role in the AI sector, making it one of the top AI stocks to watch.

Upstart (UPST)

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Upstart (NASDAQ:UPST) is a popular AI-driven lending platform that effectively weathered the pandemic-led headwinds and emerged even stronger, even amidst rising interest rates.

The firm posted encouraging results in its most recent quarter despite the adverse business environment. The firm raked in a revenue of $103 million while flaunting a better-than-expected adjusted loss per share of $0.47, triggering a substantial stock surge of over 70% on May 19.

As we advance, the firm has set optimistic targets for the second quarter, aiming for approximately $135 million in revenue and a net loss of roughly $40 million. Notably, it has wielded the axe on costs, particularly in sales and marketing, leading to a laudable 15% year-on-year decrease in total operating expenses.

Its prudent cost management and Upstart’s AI-powered credit scoring model have effectively outperformed traditional methods such as FICO, creating an enticing proposition for investors eyeing profit and lenders seeking minimized risk.

SoundHound AI (SOUN)

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SoundHound AI (NASDAQ:SOUN) is arguably one of the most attractive AI penny stocks. It has effectively caved out a unique space in conversational AI, as it looks to create tech-human interactions that feel as natural as conversations with friends.

The company is venturing into the auto industry, aiming to integrate voice assistants into vehicles. The market for voice assistants could be massive, as they become a staple in 90% of new cars.

The company’s strategy paid off. The incredible surge in demand for conversational AI led to a 54% year-over-year increase in sales. Gross margins have climbed up to 71%, and despite a net loss of 13 cents per share in the first quarter, its profitability situation has improved substantially.

SoundHound’s CEO, Keyvan Mohajer, has positioned the company at the cusp of a watershed moment in conversational AI, with AI serving as a new foundational capability in society.

ROBO Global Artificial Intelligence ETF (THNQ)

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For investors looking to tap into the AI revolution across multiple stocks, the ROBO Global Artificial Intelligence ETF (NYSEARCA:THNQ) is an interesting option.

The TNHQ ETF casts a wide net, investing in companies at the forefront of AI advancement. These include pure plays developing the indispensable technology and infrastructure and pick-and-shovels that apply to diverse sectors, from eCommerce to healthcare.

The THNQ ETF, with a reasonable expense ratio of 0.68%, offers exposure to major tech industry luminaries. It includes Nvidia, Twilio (NYSE:TWLO), Splunk (NASDAQ:SPLK), Amazon (NASDAQ:AMZN), and an additional 62 AI-focused holdings. For investors keen on participating in the AI wave while maintaining a diversified portfolio, the THNQ ETF is alluring.

Arista Networks (ANET)

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Arista Networks (NYSE:ANET) is a standout in the networking sector, specializing in cloud networking solutions, providing high-throughput data center switches tailored to the unique demands of AI-driven workloads.

With its diversified clientele comprising internet companies, cloud service providers, and enterprise data centers, Arista remains a vital cog in the AI machine.

It’s recently coming off an extraordinary first quarter where it surpassed consensus estimates on the top and bottom lines and issued strong guidance for the current quarter.

Revenues climbed by nearly 54% year-over-year, exceeding analyst expectations at $1.35 billion. Adjusted net income soared to $452.5 million, up from $268.5 million in the same period last year.

Hence, in a world where AI workloads have insatiable bandwidth appetites, Arista’s products prove instrumental in supporting the data-intensive IT infrastructure positioning it for long-term upside ahead.

Baidu (BIDU)

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For those with an eye on long-term AI investments, the allure of Baidu (NASDAQ:BIDU) is hard to resist. A trailblazer in the AI arena, Baidu’s recently unveiled its powerful chatbot called ERNIE, an AI marvel transforming human-machine interactions.

Integrating ERNIE 3.5 into Baidu’s search engine will enhance user experiences, driving wider adoption of generative AI and bolstering Baidu’s long-term growth trajectory.

In a strategic move, Baidu launched a $140 million venture fund to nurture AI startups specializing in AI-generated content. This initiative aims to nurture innovation and stimulate the growth of a productive AI ecosystem.

Baidu is broadening its AI capabilities across product offerings, with more than 120,000 Chinese companies signing up to test its in-demand ERNIE Bot platform. Baidu’s commitment to AI integration across sectors and its drive for innovation position it as a formidable player in the AI landscape.

Qualcomm (QCOM)

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Qualcomm (NASDAQ:QCOM) continues to march forward with aplomb in this dynamic arena as the AI narrative gains traction. It is turning heads with a strong emphasis on AI-enabled chips for mobile applications, connected cars, and IoT applications.

Beneath the surface, Qualcomm’s stock has enticing blue-chip features, including a robust starting valuation and a healthy dividend yield of more than 2.5%. The firm’s SVP of Product Management, Ziad Asghar, underscored its potential, stating, “This generative AI opportunity is just amazing for Qualcomm.”

The company’s recent launches, including the QCS610 and the QCS410, are running on Qualcomm’s AI Engine. Using stable diffusion, a robust text-to-image generative AI program, on an Android smartphone is a game-changer, showcasing the potential of an AI model independent of the cloud.

On the date of publication, Muslim Farooque 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.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

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