Best AI Stocks in 2024

Discover what AI stocks are and learn all about their main features.

Updated: April 3, 2024
Matt Crabtree

Written By

Matt Crabtree

 

Whether you're a newcomer to the stock market or more of a veteran, artificial intelligence (AI) is something you seriously need to start paying attention to.

In fact, because of how novel this industry is, investors with little to no trading experience shouldn't feel like they've missed the boat here — you don't have the same disadvantages of trading against esteemed investors who already have years of experience under their belt.

AI stocks are essentially your opportunity to make money off the rise of AI, and with this industry showing no signs of slowing down, it's worth coming to terms with a few AI stocks that you can get in on the ground floor with.

But still, what even are AI stocks, and how do they work? Many of us are already familiar with new software development/generative AI like ChatGPT and the Bing search engine, but how can we make money from this industry? How can we trade them?

First, you must have a baseline understanding of AI stocks before we get into some specifics. So, throughout this article, we'll look at some of their notable features, including which artificial intelligence companies stand the best chance of giving you a healthy return on your investments.

Let's get started with a simple definition.

What Are Artificial Intelligence Stocks?

AI stocks are exactly what they sound like — shares in companies that are generally seen as being at the forefront of both developing and utilising tech related to artificial intelligence.

Several companies are leading the line with AI-related products, notably OpenAI. Still, they can ultimately be summed up as businesses that employ AI to enhance their products. Whether it's improving their services — like Bing, for instance — or their general business operations, their aim here is usually to gain a competitive edge within their respective industries.

How are they integrating AI into their business operations, though? It usually comes in a few different forms and depends on the company using it. Mainly, the most common ways AI is being used is for things such as:

  • Predictive analytics
  • Natural language processing
  • Machine learning
  • Automation
  • Deep learning algorithms

So, because of how widely applicable artificial intelligence can be for modern businesses, we're seeing more and more companies employ the technology in hopes to capitalise on the AI boom. And as a result, we now have AI stocks that investors like you can get involved with.

How Do Artificial Intelligence Stocks Work?

So, as mentioned, investing in AI stocks is all about purchasing shares of companies paving the way regarding AI innovation.

Like most other tradable financial assets, the value of these stocks is linked directly to the success and growth of whatever underlying technologies are being used by these companies.

Still, as you would with other technology-related stocks, you will want to understand how these stocks work so that you have the best chance of making a solid investment.

For example, you wouldn't start investing in random semiconductor stocks without having some baseline knowledge of how the technology works, so why treat the AI industry any differently?

Features That Define AI Stocks

Multiple features define AI stocks, and it helps to know their main elements before you trade them. Here are the features you need to remember.

Innovation in Diverse Sectors

The best part about AI stocks is that they aren't just limited to one specific industry; they span a range of them. Whether it's healthcare and finance or manufacturing and entertainment, AI capabilities can be utilised in industries you might not typically expect it to be.

Because of how diverse AI is proving to be, it allows investors to choose various companies aligned with their interests and beliefs — all while gaining exposure to AI's potential in these sectors.

Continuous Evolution

Even from AI's introduction to mainstream audiences within the last few years, the industry's development has already been incredibly rapid. Whether it's from AI image generation to self-driving cars, the space is evolving before our eyes.

Compare this to other, more stagnant financial assets like precious metals, and it's clear why AI stocks are becoming more and more popular.

Data-Centric Approach

Generally speaking, AI companies end up relying on huge amounts of data so that they can train their algorithms and models. Because of this, these companies typically accumulate and gain access to valuable datasets across various fields.

If you're less familiar, data is king in many tech industries, so a company having access to this level of information means they can use it to enhance their products or sell it to other companies for a profit.

As far as investors should be concerned, this means the company has less of a reliance on one single revenue stream, so this generally gives it quite high investment appeal as their eggs aren't all in one basket.

AI Stocks Pros and Cons

While we've talked fairly positively about AI stock trading so far, it's vital to remember that, like all stocks, investing is inherently risky.

So that you're not going into any trades with bias conviction, we've put together a few of the main pros and drawbacks you should consider before getting involved with the AI stocks we'll be exploring later in the article:

Pros

✔️ Potential for Exponential Growth

Even based on the short time it's been in the public eye, AI technology has demonstrated its potential to revolutionise multiple industries and ultimately create new market leaders.

As such, investing in AI stocks puts you at the forefront of an exciting new financial prospect, giving you the potential to participate in long-term growth for your investment portfolio.

✔️ Diversification of Portfolio

As mentioned earlier, AI stocks aren't exactly limited to one industry like many other financial assets are. Because of this, they give investors a great opportunity to diversify their portfolio since they're exposing themselves to various technology sectors, which is generally very helpful in reducing your overall risk.

✔️ Innovation and Adaptability

Because of how competitive the AI industry is becoming, the various companies involved need to thrive on innovation to quickly adapt to changing market conditions.

Nowhere else is this example as apparent as it is with generative AI technology like ChatGPT — within months of the technology becoming viral, you began seeing copycats from Google, Microsoft, and even social media companies like Snapchat that now offer a personal AI chatbot.

Ultimately, it's this kind of competitivity that's going to drive innovation within the field and make certain companies more profitable as a result.

✔️ Longevity of Relevance

As AI becomes increasingly incorporated into our daily lives — ChatGPT being used to aid many people's daily workflow, for instance — companies specialising in AI are likely to remain fairly relevant and sought after, which is a guarantee that's fairly uncommon in other industries.

Cons

❌️ Volatility

Although AI is developing rapidly, this isn't always the positive that it may look like at the surface level. In reality, whenever technology advances at this speed, there's a strong chance that it can lead to market volatility.

Anyone who has ever invested in financial assets such as cryptocurrency will be aware of how unsettling and potentially dangerous this kind of volatility can be, so if AI stocks experience significant price fluctuations, it can make the whole ordeal fairly risky for investors.

❌️ Regulatory Challenges

Again, similar to the cryptocurrency industry, the AI industry is subject to evolving regulations and ethical considerations because of how new the technology is and how fast it's developing.

Because of this, any companies operating within this space might face a few hurdles when complying with new rules and standards.

❌️ Competition and Uncertainty

The AI sector at large is incredibly competitive, which means that it's not exactly easy to predict which companies will emerge as leaders, given how little time they've had to prove themselves.

Because of this uncertainty, a significant amount of research should be going into any investments you're thinking of making, even the AI stocks we will be exploring on our list shortly.

❌️ Ethical Concerns

Whether it's data privacy, bias in certain algorithms, or the overall threat that automation poses on certain jobs, some ways AI is being used are certainly not without ethical concerns.

As such, it's possible that these kinds of concerns can impact how the technology is perceived by the public, which can naturally impact the performance of certain AI stocks.

Best AI Stock Trading Platforms — Reviews

We reviewed and tested several AI intelligence stock platforms and looked at their features.

Here are the top platforms you may consider to start your AI stock trading journey, plus the main features you may want to consider when choosing between these services.

1. Plus500

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Plus500 offers traders the chance to gain exposure to stocks in AI without the need to trade them individually. The platform is accessible through the AI Index BAIGUI. It offers a tracker that monitors US-based companies' performance and AI-generated revenue.

We used the service and liked the option to add favourites and set alerts for when the AI stocks reached the pre-set price.

We also found the charts insightful, which allowed us to view how the markets changed over time. It comprises ten influential companies that have made groundbreaking artificial intelligence developments, such as Nvidia.

Using this platform, we could gain exposure to the changes in this market segment with a single trade. We could also diversify our portfolio and noticed that the individual share prices accurately reflected the developments in the AI field.

2. eToro

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. {etoroCFDrisk}% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

After registering with eToro, we were able to start trading AI stocks. We used the AI-Revolution Smart Portfolio, which focuses on companies that dominate the AI field.

We noticed that it includes a couple of main types, including companies that rely on AI technology infrastructures and companies that use these technologies to improve their offerings.

We could use eToro's search function to narrow down our list of companies that offer stocks related to AI technologies. We could also complete research to check their performance and easily consider the market trends.

We noticed many assets were available through the AI-Revolution Smart Portfolio, including International Business Machines Corporation and Micron Technology Inc. Our minimum investment amount was £500.

We liked that eToro is well-known for its AI stock options and is an easy-to-use platform. We could even use the CopyTrader feature to replicate expert traders’ investment actions related to AI stocks.

3. IG

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

We found it easy to begin trading stocks of companies directly linked to artificial intelligence-related companies when using IG. Some examples of company stocks we could trade include IBM and Alibaba.

We could also trade ETFs and indices such as the NASDAQ100 when using IG. Through these trading options, we could diversify our portfolio and add assets related to the AI sector through various financial instruments.

Another example of a company that used AI and offered stocks included Microsoft Corp. This was available through IG to trade.

We liked the fact that the sell and buy prices were clearly displayed. Once we had opened an account, we could place AI trades. We could view the live marketplace changes via the AI exchange-traded funds pane and easily check the live market prices with IG.

Best Artificial Intelligence Stocks — Reviews

We also reviewed the best AI stocks you can select within these platforms to begin trading this highly popular asset.

Consider the stocks below to discover which types are the most frequently traded.

1. Amazon.com Inc. (AMZN)

Amazon, of course, primarily known for its successful e-commerce platform, is one of the most prominent companies in the AI landscape. As with a few options, you may not directly associate Amazon with AI. However, that only serves as a testament to how seamlessly they've integrated the technology within their operations to enhance the overall customer experience.

From its recommendation algorithms that give user browsing a personalised feel to voice assistants like Alexa, Amazon has been integrating AI into its ecosystem for a while now. Because of this integration, it's no surprise that their stock is performing exceptionally well this year — currently sitting at £105 per share.

2. Alphabet Inc. (GOOGL)

Alphabet Inc. (GOOGL) is the parent company of Google, and they're yet another company that has been at the forefront of AI innovation for a few years now. You'll know them mostly for their search engines, and AI has been playing a role in their ease of use for quite some time — whether that's for refining search results, anticipating user needs, or even serving tailored advertisements.

Beyond search engines, though, Alphabet Inc.'s use of AI spans several domains, from self-driving technology with Waymo to healthcare research with their DeepMind project. All of which have contributed to their current stock price of £100 per share.

In addition, it's also worth paying attention to Alphabet's interest in cloud computing power, with Google's cloud AI platform offering a few different machine learning/data analytic tools.

3. Microsoft Corporation (MSFT)

Finally, let's round things off with Microsoft (MSFT). Since taking over as chairman in 2021, Satya Nadella has been leading the company towards more AI-related services — their Azure cloud platform, for instance, is an excellent hub for AI services that let businesses dip their toes in the sector without having to break the bank

Aside from this, Microsoft's investment into products like Cortana and Microsoft 365 are just a couple more examples of how they intend to use AI to enhance business productivity and ultimately provide a better user experience.

Although they're slightly less advanced compared to the two other companies we've mentioned on this list, Microsoft is yet another excellent option if you're a beginner and looking to enter the AI space with a household name — hence why their stock price is sitting close to their all-time high at £251 per share.

How to Choose the Right AI Stocks

If you're ready to start trading AI stocks, it's worth considering a few final tips.

Make sure you select the correct AI stock options by remembering the following three pieces of advice.

1. Research Company Fundamentals

When choosing AI stocks, it's always best to look at the company's underlying stance and plans for how they intend to use the technology and other factors like their market share and revenue growth.

2. Monitor Regulatory and Ethical Considerations

As mentioned, regulations surrounding the AI industry are constantly evolving, so any company proactively addressing issues related to data privacy and how to mitigate bias is far more likely to be a sustainable option to invest in.

3. Track Record of Innovation

Naturally, the best AI stocks to invest in will come from innovative companies, given how heavily the market depends on innovation. So, always try to purchase shares from companies with a history of introducing groundbreaking products or solutions.

Best AI Stocks: Final Thoughts

To wrap things up, we should consider that while the AI revolution is certainly real and seemingly here to stay, this doesn't mean you should go out there and invest in everything that has ‘AI' in its name.

As with all trends, such as investment trends, there are going to be a lot of AI-related companies merely trying to ride off of the coattails of more established companies to get in on the hype. This is why we've only listed major businesses with an established history — you can feel safe getting behind them as they have a proven record of success and are investing in all the right areas.

Of course, it's also worth mentioning that although the possibilities of AI seem endless and exciting, AI stocks are subject to all the same fluctuations as your average financial asset. As such, it's paramount that you exercise caution when investing money in these stocks — not to mention doing your research.

Related Guides:

Best AI Stocks: FAQs

What Is the Best AI Stock to Invest in in 2024?

How Accurate Is AI in Stock Trading?

Is AI Stock a Good Buy?

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