While artificial intelligence has captured headlines since ChatGPT, the industry is still growing. The AI market is projected to maintain a compounded annual growth rate of 36.6% until 2030, suggesting that many of the industry’s top corporations will continue to win.
Investors have different ideas about what makes a stock successful, but they monitor a few things. Corporations should exhibit rising revenue and profit margins. Advantages over competitors are also important, as a moat makes it easier for a firm to exceed investors’ expectations. These are the AI stocks to buy now that look poised to outperform the stock market.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) is a quick and easy choice in the artificial intelligence industry. Even though the corporation has been mentioned many times and has become a household name, its financial growth is still spectacular.
Revenue increased by 262% year-over-year to reach $26 billion in Q1 FY25. Net income also soared by 628% year-over-year, reaching $14.9 billion. Nvidia has maintained net profit margins above 50% as big tech companies rush to buy the company’s AI chips. This trend doesn’t show any immediate signs of slowing down, which indicates more gains for long-term investors.
NVDA stock has almost tripled year-to-date and is up by more than 3,300% over the past five years. Nvidia recently concluded a 10-for-1 stock split that suddenly puts it in a position to get added to the Dow Jones Industrial Average. Nvidia has the financials to back its success, and Wall Street is also convinced. The stock is currently rated as a Strong Buy among 40 analysts.
Crowdstrike (CRWD)
Crowdstrike (NASDAQ:CRWD) is a leading provider of cybersecurity solutions for businesses. Cybersecurity is getting more important with each passing month as companies continue to rely on the internet for data storage and hackers get smarter.
Some cyber hackers use artificial intelligence to hack more companies and conduct deeper attacks on isolated targets. Crowdstrike has also been upping its game with artificial intelligence defense systems. The Falcon Platform makes it easy for cybersecurity professionals to detect and address threats before companies get hacked.
While most cybersecurity firms are experiencing headwinds, Crowdstrike continues to charge forward. Q1 FY25 revenue increased by 33% year-over-year to reach $921.0 million. Net income was $42.8 million compared to a $0.5 million profit in the same quarter last year.
Crowdstrike generates most of its business from subscriptions, which means plenty of annual recurring revenue (ARR). The company’s ARR stood at $3.65 billion at the end of the first quarter. That’s up by 33% year-over-year.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) has been using artificial intelligence for numerous years to offer relevant search results for its users. Many business owners try to rank on top of these search engines and run advertisements to skip organic SEO. The strong demand for Google and YouTube ad placements has created a multi-billion dollar that keeps giving.
The tech giant reported 15% year-over-year revenue growth and 57% year-over-year net income growth in the first quarter. Cost-cutting measures continue to strengthen the bottom line while Alphabet diversifies beyond advertising. While ad platforms still make up most of the company’s revenue, Google Cloud now makes up more than 10% of the firm’s total revenue. Google Cloud is projected to get a boost from artificial intelligence that should translate into healthy profit margins.
Investors may be underestimating how quickly Alphabet can raise its net profit margins. The company seems to follow a similar playbook to Meta Platforms (NASDAQ:META), which focuses on efficiency. Alphabet only has a 28 P/E ratio and is up by 28% year-to-date. Further profit margin expansion should lead to considerable upside for the stock.
On this date of publication, Marc Guberti held long positions in NVDA, CRWD and GOOG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.