The Best AI Stocks to Invest in for Long-Term Growth

Artificial intelligence (AI) has been growing like crazy lately. Lots of investors are now looking into which companies to put their money into to get a piece of this fast-moving industry. Finding the best AI stocks for long-term growth can feel a bit tricky, but it’s totally doable if you know what to look for.

Key Takeaways

• AI stocks are shares in companies that either work directly with AI or use it a lot in their business.
• Some big companies, like Palantir, have seen huge value increases because of AI.
• You can find AI stocks through ETFs, which are like baskets of different stocks, or by looking at individual companies.
• It’s important to know if an ETF actually invests in AI companies or just uses AI for trading.
• Always check a company’s background, especially if it’s new, before you invest.

1. Palantir Technologies

Palantir Technologies is definitely a name you hear a lot when people talk about AI. They’re a software and big data analytics company, and their Artificial Intelligence Platform (AIP) is designed to help big organizations use AI models, kind of like ChatGPT, within their own systems.

Palantir’s AIP helps organizations integrate AI into their operations.

They’ve got some pretty big clients, including the U.S. Department of Defense, Morgan Stanley, and even Merck & Co. It’s interesting to see how they’re helping these different sectors use AI to improve how they work. It makes you wonder what other industries could benefit from this kind of technology.

Palantir has seen significant spikes in value, maintaining high performance despite market challenges. This makes them a noteworthy player in the AI space, even with smaller, lesser-known AI companies emerging.

Here are a few key things to know about Palantir:

• They work with major government organizations.
• Their AIP platform is versatile.
• They’re a big name in the AI discussion.

2. Indxx Global

When considering AI investments, it’s useful to look at indices that focus on robotics, AI, and big data. One such index is the Indxx Global Robotics & Artificial Intelligence Thematic Index. Another is the Indxx Artificial Intelligence & Big Data Index. These indices can provide a broad overview of the AI market and its key players.

It’s worth noting that many smaller AI companies have shown significant returns recently. Keeping an eye on these can be beneficial, but remember that smaller companies often come with higher risk.

Investing in AI requires careful consideration. It’s important to research individual companies and understand their specific roles in the AI ecosystem. Diversification can help mitigate risk, especially when dealing with smaller, rapidly growing companies.

To get started with AI investing, you’ll likely need a brokerage account.

3. Andra Capital

Andra Capital distinguishes itself by concentrating on investments in companies that are in their early stages and are focused on artificial intelligence and related technologies. They aim to support the next wave of tech innovation. It’s a different approach than just throwing money at established giants.

Andra Capital’s investment strategy often involves providing not just capital, but also mentorship and resources to help these young companies grow. This hands-on approach can be attractive to investors looking for more than just financial returns.

Investing in venture capital, especially in the AI space, carries significant risk. Early-stage companies are inherently volatile, and success is far from guaranteed. Investors should carefully consider their risk tolerance and conduct thorough due diligence before committing capital.

Here are a few things to consider about Andra Capital:

• Focus on early-stage AI companies.
• Hands-on approach with mentorship and resources.
• Higher risk, higher potential reward.

It’s worth noting that SingularityNET’s community voted to expand the availability of the AGI tokens within the AI ecosystem. This could potentially impact the landscape for AI-focused venture capital firms like Andra Capital.

4. ETFs

Exchange-Traded Funds (ETFs) offer a convenient way to invest in a basket of companies focused on AI. These funds typically track a market index that aligns with specific investment objectives. It’s a way to diversify investments without picking individual stocks.

There are a couple of ways to find AI ETFs. You can look for ETFs that track AI stock indexes, such as the Indxx Global Robotics & Artificial Intelligence Thematic Index or the Nasdaq CTA Artificial Intelligence & Robotics Index. These indexes serve as benchmarks for ETFs focused on AI.

Another method is to use an ETF screener. Search for terms like "artificial intelligence," "machine learning," or "AI." However, it’s important to do your homework. Not all ETFs with "AI" in their name are pure AI plays. Some might be diversified ETFs that use AI-powered trading strategies, rather than investing directly in AI companies.

Always read the ETF’s prospectus to understand its investment strategy and holdings. This will help you determine if the ETF aligns with your investment goals.

Here’s a quick rundown of things to consider when choosing an AI ETF:

• Index Tracking: Does the ETF track a well-known AI index?
• Holdings: What are the top companies held by the ETF? Are they core AI developers or peripheral players?
• Expense Ratio: What are the fees associated with the ETF? Lower fees mean more of your investment goes to work for you.

5. Blue-Chip

When you’re thinking long-term, it’s hard to ignore the appeal of blue-chip stocks. These are the established, reliable companies that have been around for ages and have a proven track record of success. They might not offer the explosive growth potential of some smaller AI startups, but they provide a sense of stability and often pay dividends, which can be a nice bonus.

Think of companies like Microsoft or Google (Alphabet). They’re heavily invested in AI, but they also have diverse revenue streams that aren’t solely dependent on AI breakthroughs. This diversification makes them less risky than companies that are entirely focused on AI.

Investing in blue-chip AI stocks can be a good way to get exposure to the AI market without taking on excessive risk.

Here’s why blue-chip AI stocks might be right for you:

• Stability: These companies have weathered economic storms before and are likely to continue doing so.
• Dividends: Many blue-chip companies pay dividends, providing a steady stream of income.
• Diversification: Blue-chip companies typically have multiple lines of business, reducing their reliance on any single product or service. For example, you can monitor big data technologies to see how they are doing.

Blue-chip companies often have the resources to invest heavily in research and development, giving them a competitive edge in the AI space. They can afford to attract top talent and acquire promising AI startups, further solidifying their position in the market.

It’s important to remember that even blue-chip stocks aren’t immune to market fluctuations. However, their strong financial position and established business models make them a relatively safe bet for long-term investors. Before investing, it’s always a good idea to do your own research and consider your own risk tolerance. You can also check the best-performing stocks to see how they are doing.

6. Technology Companies

When you’re thinking about investing in AI, it’s hard to ignore the big technology companies. These are the firms that already have a strong foothold in the tech world, and they’re increasingly integrating AI into their existing products and services. It’s a bit of a safer bet than investing in smaller, more experimental AI companies.

These companies often have the resources to invest heavily in research and development, and they also have a large customer base to test and deploy new AI technologies. Plus, they’re usually more stable financially than smaller companies, which can be a big plus for long-term investors.

Investing in these giants can provide a more stable entry point into the AI market, balancing risk with potential growth.

Think about it: a company that already makes your phone, runs your cloud storage, or powers your social media feed is now also using AI to improve those products. That’s a pretty powerful combination. They are also allocating a significant amount of their revenue to research and development.

Here’s a quick look at why these companies are worth considering:

• Established Infrastructure: They already have the servers, data centers, and networks needed to support AI development.
• Large Datasets: AI thrives on data, and these companies have tons of it.
• Existing Customer Base: They can easily roll out AI features to millions of users.

Of course, investing in these companies isn’t without risk. They’re often large and complex, which can make it difficult to adapt quickly to new technologies. But for many investors, the stability and resources of these tech giants make them a good choice for long-term AI investments. It’s all about finding the right balance for your portfolio. These companies are often blue-chip technology companies that have invested in or partnered with AI developers.

7. AI Developers

When you think about investing directly in AI, companies solely focused on AI development probably come to mind. These firms are dedicated to pushing the boundaries of what AI can do. However, it’s worth noting that some analysts believe that investing in smaller AI developers might not be the best way to get into AI. Let’s explore this a bit more.

AI stocks come in different forms. Some are big tech companies that use AI, and others are smaller companies that are all about AI. There are many applications for AI, and thus a large variety of AI stocks: Some AI companies create voice recognition software. Others create pilotless aircraft.

Investing in AI developers can be exciting, but it’s important to remember that this area is still developing. It’s a good idea to do your research and consider the risks before investing.

Here are a few things to keep in mind when looking at AI developers:

• Innovation: Are they working on something new and exciting?
• Partnerships: Do they work with bigger companies?
• Financials: Are they making money, or are they burning through cash?

Keep in mind that the AI landscape is constantly changing. It’s important to stay informed and adjust your investment strategy as needed. For example, AI is increasingly capable of predicting stock market trends by analyzing vast datasets through machine learning, though perfect prediction remains elusive.

8. Experimental Companies

When considering AI stocks, it’s important to remember that not all companies are created equal. Some are established tech giants, while others are smaller, more experimental ventures solely focused on AI development. These companies often represent higher risk but also potentially higher reward.

These smaller companies are often at the forefront of innovation, exploring new AI applications and technologies. However, their financial stability and market position may be less secure than those of larger, more established companies. Investing in these companies requires a higher risk tolerance and a longer-term investment horizon.

Here are a couple of examples of experimental AI companies:

• Quantum Computing Inc. (QUBT): As the name suggests, this company is involved in developing quantum computers. These computers use quantum physics to perform calculations much faster than traditional computers. They also operate a semiconductor foundry whose chips can be used in quantum computing applications. Quantum computing could revolutionize AI by enabling much more complex and faster AI models.
• AppLovin Corp. (APP): This is a software company that develops and markets mobile apps for corporate clients, including game studios. Their advertising services are powered by a proprietary AI model called Axon. AppLovin is an example of a company using AI to improve its existing business, rather than focusing solely on AI development.

Investing in experimental AI companies can be exciting, but it’s important to do your research and understand the risks involved. These companies may not have a proven track record, and their stock prices can be volatile. However, if you’re willing to take on the risk, the potential rewards can be significant.

It’s important to consider your investment goals and risk tolerance before investing in any AI stock, but especially when considering experimental companies. These companies can offer high growth potential, but they also come with a higher degree of uncertainty.

9. Stock Screeners

Stock screeners are handy tools for investors looking to pinpoint AI stocks that align with specific criteria. They allow you to filter through thousands of companies based on various financial metrics, growth potential, and other factors. It’s like having a super-powered search engine specifically for stocks.

• Financial Metrics: Screeners let you filter by price-to-earnings ratios, debt-to-equity ratios, and other key financial indicators.
• Growth Potential: You can identify companies with high revenue growth or projected earnings increases.
• Customizable Filters: Most screeners offer a wide range of customizable filters to match your investment strategy.

Using stock screeners effectively requires a clear understanding of your investment goals and risk tolerance. It’s not just about finding any AI stock, but finding the right AI stock for you.

Stock screeners can save you a ton of time by narrowing down the field of potential investments. For example, you can use them to find companies with a market cap over $1 billion that are also showing strong revenue growth in the AI sector. You can also use screeners to find top IPOs to watch.

Here’s a simple example of how you might use a stock screener:

1. Select a Screener: Choose a reputable stock screener (many brokerage platforms offer them).
2. Set Your Criteria: Input your desired criteria, such as industry (AI), market cap (over $1 billion), and revenue growth (over 10% annually).
3. Review the Results: Analyze the list of companies that meet your criteria and conduct further research on each one.

10. Investment Goals

Figuring out what you want to achieve with your investments is super important before you even think about picking stocks. It’s like setting a destination before starting a road trip. Your investment goals will shape the types of AI stocks you should consider.

Think about it – are you saving for retirement, a down payment on a house, or maybe your kid’s college fund? Each of these goals has a different timeline and risk tolerance, which will influence your investment decisions. For example, if you’re investing for retirement decades away, you might be comfortable with higher-risk, high-growth AI stocks. But if you need the money in a few years, you’ll probably want to stick with more stable, established companies.

Here’s a simple way to think about it:

• Short-term goals (less than 5 years): Focus on capital preservation. Consider less volatile AI stocks or even ETFs that offer diversification.
• Mid-term goals (5-10 years): You can take on a bit more risk. Look at established AI companies with a track record of growth.
• Long-term goals (10+ years): This is where you can explore higher-growth potential, even if it means more volatility. Consider smaller, innovative AI developers.

It’s also a good idea to regularly review your investment goals and adjust your portfolio as needed. Life changes, and so should your investment strategy. Don’t be afraid to rebalance your portfolio to stay aligned with your goals and risk tolerance.

Remember, there’s no one-size-fits-all approach to investing. What works for your neighbor might not work for you. Take the time to understand your own investment goal and risk tolerance, and then choose AI stocks that align with your specific needs.

Conclusion

So, we’ve talked a lot about AI stocks and what they mean for your money. It’s clear that artificial intelligence is a big deal, and it’s only going to get bigger. Picking the right companies to put your money into can be a bit tricky, though. You’ve got the big, well-known tech companies that are getting into AI, and then there are the smaller, newer companies that are all about AI. Both have their good points and their not-so-good points. Remember, doing your homework is key. Look into what these companies are actually doing and how they plan to grow. It’s not just about what’s popular right now. Think about the long game, because that’s where the real rewards often are. Investing in AI can be a smart move, but it’s about being careful and making choices that fit your own financial plans.

Frequently Asked Questions

What exactly are AI stocks?

AI stocks are shares of companies that either create or heavily use artificial intelligence in their business. This can include anything from companies making voice recognition software to those developing self-driving vehicles.

Which AI companies are doing well right now?

Many big companies, like Palantir Technologies, have seen their stock prices go way up because of their AI work. Even with market ups and downs, their value stays high. But there are also smaller, less famous AI companies that have done really well too.

Are there experts who can tell me which AI stocks to buy?

Haydar Haba, who started Andra Capital (a company that invests in AI), says there are many publicly traded companies with strong AI interests that are set to grow as the AI industry expands.

What are the different kinds of AI stocks?

AI stocks can be split into two main types: big, well-known tech companies that have put money into or teamed up with AI developers, and smaller, newer companies that are completely focused on making new AI stuff.

How do I find AI stocks that are right for me?

You can use stock screeners from most brokerage firms to help you find stocks that fit your needs. However, you should still do your homework and learn about the company’s basics. Some AI companies are very new, which can make this harder and riskier.

Is there a less risky way to invest in AI stocks?

Some investors, especially those who want to invest for a long time and don’t want to trade stocks all the time, choose to invest in AI through special funds called exchange-traded funds (ETFs) that focus on AI.

A.Peyman Khosravani

Peyman Khosravani is a seasoned expert in blockchain, digital transformation, and emerging technologies, with a strong focus on innovation in finance, business, and marketing. With a robust background in blockchain and decentralized finance (DeFi), Peyman has successfully guided global organizations in refining digital strategies and optimizing data-driven decision-making. His work emphasizes leveraging technology for societal impact, focusing on fairness, justice, and transparency. A passionate advocate for the transformative power of digital tools, Peyman’s expertise spans across helping startups and established businesses navigate digital landscapes, drive growth, and stay ahead of industry trends. His insights into analytics and communication empower companies to effectively connect with customers and harness data to fuel their success in an ever-evolving digital world.