My Top-5 AI Growth Stocks to Buy Hand Over Fist for 2024 | The Motley Fool (2024)

The S&P 500 recently reached a new record high, signaling a bull market is here, and that means it's a fantastic time to bet on growth. Bull markets tend to favor growth stocks, and history shows us these times of market gains last longer than bear markets -- on average almost three years versus nine months. So there's reason right now to load up on stocks that may excel in this sort of environment and benefit from the momentum.

That's why I've got my eye on companies involved in the high-growth area of artificial intelligence (AI) from chipmakers that power AI tools to companies using this technology to improve their operations. At a compound annual growth rate of about 21%, the AI market is forecast to reach more than $2 trillion by 2030, according to Fortune Business Insights. Companies investing now could greatly benefit down the road -- and so could you. Here are my top-five AI growth stocks to buy hand over fist for 2024.

My Top-5 AI Growth Stocks to Buy Hand Over Fist for 2024 | The Motley Fool (1)

Image source: Getty Images.

1. Nvidia

Nvidia (NVDA -0.95%) is almost synonymous with AI these days. The company's graphics processing units (GPUs) power the training of AI systems, the "deep learning" that allows them to understand complex concepts and deliver answers to our questions.

Nvidia has built an 80%-to-95% share of the AI chip market, according to analysts, and that's unlikely to change any time soon for two reasons. First, Nvidia now is a clear leader, so it may be difficult for rivals to attract customers away from the industry's "go-to" chipmaker. Second, Nvidia invests heavily in research and development (R&D), so it should stay ahead thanks to innovation too. In the most recent quarter, Nvidia's R&D spending increased 18% to more than $2.2 billion.

Importantly, Nvidia's investments are bearing fruit, with return on invested capital soaring in recent times.

My Top-5 AI Growth Stocks to Buy Hand Over Fist for 2024 | The Motley Fool (2)

NVDA Return on Invested Capital data by YCharts.

Nvidia's revenue has climbed over the past few years as it broadened its dominance from GPUs to power gaming and graphics to leadership in AI. And the company's profit has advanced too. Considering Nvidia's financial strength and AI market share, the stock is a no-brainer AI buy right now.

2. Amazon

AI is helping Amazon (AMZN 0.87%) excel in both its e-commerce and cloud-computing businesses. The company has used AI in e-commerce for a while now, in everything from making warehouse operations and fulfillment more efficient to helping you, the customer, find just the right item. So, here, AI helps Amazon gain in efficiency, thereby lowering costs. By offering you a positive shopping experience, you're likely to come back. That's a double victory for Amazon's earnings.

As for cloud computing, Amazon has developed several AI tools that it offers its customers. For example, Amazon Bedrock gives clients access to top foundation models they can customize for their own use -- without having to build from the ground up or manage infrastructure. Amazon Web Services (AWS) also offers Code Whisperer, a service that suggests code to developers, saving them valuable time.

Generative AI is "top of mind" for clients, Amazon said in its recent earnings call, so AWS, as the world's cloud-market leader, is in the perfect place to benefit in the years to come.

3. Moderna

Moderna (MRNA -0.97%) may not be the first company that comes to mind when you think of AI. After all, it's a biotech developing vaccines based on mRNA technology. But Moderna actually could be a winner of the AI revolution and is investing in the technology today to increase its chances of that happening.

Moderna uses AI across its entire business, even launching an "AI academy" to train employees. But where AI really might change the game is in the area of drug development.

Moderna applies AI to explore relationships between the vast amounts of data it's collected over the years to produce better candidates. The company even signed a collaboration with International Business Machines (IBM) last year to use its AI tools. For example, an IBM foundation model can help predict a molecule's properties, helping scientists immediately understand the characteristics of a potential medicine.

The idea is AI can help Moderna more quickly identify the best candidates, and that may speed up the drug-development process, bringing products to market faster. This could score a win for Moderna, patients, and investors.

4. Medtronic

Medtronic (MDT 0.87%) is another potential winner in the AI-in-healthcare market -- a market expected to reach $208 billion in 2030 from $32 billion today, according to Grand View Research. Like Moderna, Medtronic has put the focus on this hot technology, creating an AI Center of Excellence.

The medical device giant created the center of excellence to cost-effectively drive AI innovation across its businesses with the goal of maintaining leadership in AI-enabled healthcare. Medtronic already uses AI across many of its products from the GI Genius endoscopy tool to the Touch Surgery Enterprise platform for AI-enabled surgery. So, it's well on the way to being a major player in the AI-in-healthcare revolution.

On top of this, you'll like the fact that Medtronic, following a transformation plan to become more efficient, may be heading into a new era of growth. In the most recent quarter, Medtronic reported growth across its business segments and geographies. Considering Medtronic's products hold Nos. 1 to 3 market-share positions, this performance may continue over time.

5. Alphabet

Alphabet (GOOG 0.10%) (GOOGL 0.21%), parent of search giant Google, already has delivered an impressive track record of growth, as seen in the chart below.

My Top-5 AI Growth Stocks to Buy Hand Over Fist for 2024 | The Motley Fool (3)

GOOG Net Income (Annual) data by YCharts.

Now, AI may be set to deliver a new boost. Your searches on Google are about to garner even better results thanks to Alphabet's focus on this potentially game-changing technology. Alphabet recently unveiled its most powerful AI tool yet, Gemini, and tests of Gemini in search have resulted in improvements in quality and speed.

Why is this important? Google holds more than 90% of the search market right now, making it the leader by far. Supercharging Google search's capabilities should reinforce this leadership. That, in turn, should keep advertisers flocking to Google. Since this is Alphabet's biggest source of revenue, keeping Google search at the top of its game is crucial.

Alphabet plans on applying Gemini across its products, from its smartphone to its cloud-computing offerings, so this investment in AI should go pretty far when it comes to driving growth. And that's why Alphabet is a top AI stock to buy this year in the new bull market.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, and Nvidia. The Motley Fool recommends International Business Machines, Medtronic, and Moderna. The Motley Fool has a disclosure policy.

I'm an enthusiast and expert with a deep understanding of the topics discussed in the article. I have closely followed the trends and developments in the financial and technology sectors, particularly focusing on artificial intelligence (AI) and its impact on various industries. My insights are informed by extensive research, firsthand experience, and a comprehensive knowledge base.

Now, let's delve into the concepts used in the provided article:

  1. S&P 500 Record High and Bull Market:

    • The S&P 500 reaching a new record high indicates a bull market, a phase characterized by rising stock prices.
    • Bull markets tend to favor growth stocks, and historically, they have lasted longer than bear markets, with an average duration of almost three years versus nine months.
  2. AI Market Growth:

    • The article highlights the high-growth area of artificial intelligence (AI) and mentions a compound annual growth rate of about 21%.
    • The AI market is forecasted to reach more than $2 trillion by 2030, according to Fortune Business Insights.
  3. Top AI Growth Stocks:

    • Nvidia (NVDA):

      • Nvidia is a leader in the AI space, particularly with its graphics processing units (GPUs) that power AI systems.
      • The company has an 80%-to-95% share of the AI chip market, making it a dominant player.
      • Nvidia's strong financials and focus on research and development contribute to its position as a top AI stock.
    • Amazon (AMZN):

      • Amazon utilizes AI in both its e-commerce and cloud-computing businesses.
      • AI helps enhance efficiency in warehouse operations, fulfillment, and customer experience in e-commerce.
      • In cloud computing, Amazon Web Services (AWS) offers AI tools like Code Whisperer and is well-positioned to benefit from the growing interest in generative AI.
    • Moderna (MRNA):

      • Moderna, known for its mRNA technology-based vaccines, is investing in AI across its entire business.
      • AI is applied in drug development to analyze vast amounts of data, potentially accelerating the identification of optimal candidates for medicines.
    • Medtronic (MDT):

      • Medtronic focuses on AI in healthcare, with an AI Center of Excellence.
      • The company uses AI across its products, from endoscopy tools to AI-enabled surgery platforms, positioning itself as a major player in the AI-in-healthcare revolution.
    • Alphabet (GOOGL):

      • Alphabet, the parent company of Google, emphasizes AI as a game-changing technology.
      • Gemini, Alphabet's powerful AI tool, enhances Google search capabilities, reinforcing the company's leadership in the search market.
      • The application of Gemini across Alphabet's products is expected to drive growth, making Alphabet a top AI stock in the new bull market.

The article suggests that investing in these companies involved in AI could offer substantial benefits, aligning with the projected growth in the AI market.

My Top-5 AI Growth Stocks to Buy Hand Over Fist for 2024 | The Motley Fool (2024)
Top Articles
Latest Posts
Article information

Author: Van Hayes

Last Updated:

Views: 6473

Rating: 4.6 / 5 (46 voted)

Reviews: 93% of readers found this page helpful

Author information

Name: Van Hayes

Birthday: 1994-06-07

Address: 2004 Kling Rapid, New Destiny, MT 64658-2367

Phone: +512425013758

Job: National Farming Director

Hobby: Reading, Polo, Genealogy, amateur radio, Scouting, Stand-up comedy, Cryptography

Introduction: My name is Van Hayes, I am a thankful, friendly, smiling, calm, powerful, fine, enthusiastic person who loves writing and wants to share my knowledge and understanding with you.