Q1’s Rising Stars: 3 AI Stocks for Your Must-Watch List

Stocks to buy

Even though it still sounds like science fiction, artificial intelligence (AI) has arrived for full integration into the technology industry. Unlike the tangible products most investors associate with tech companies, AI software relies less on physical presentation and more on functionality. This makes it tricky to figure out who offers the best product. However, with the global software market projected to reach $353.5 billion in 2024 and software revenue expected to show a compound annual growth rate (CAGR) of 4.07%, it seems certain the applications of AI will only continue to broaden.

With this new market opening, nearly every tech company worth its salt wants to ride the AI wave. To make the rush towards AI integration worth taking advantage of this year, here are three AI stocks to watch.

IBM (IBM)

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A longtime staple in the industry, IBM (NASDAQ:IBM) and its AI project, Watson, fly under the radar compared to popular models like ChatGPT. Even so, IBM’s recent announcement of the Quantum System Two computer may send their AI leaps ahead of the competition.

The advantage of IBM Quantum System Two lies in its modular design, allowing scientists to configure the system to their needs. Compared to conventional computers, quantum computers are cited as 158 million times faster than the fastest supercomputers available.

As such, the potential of using quantum supercomputers to train the Watson AI could result in capabilities leagues ahead of the competition. Keep in mind that IBM builds its software around cutting-edge computer research. Therefore, Watson is at the forefront of AI implementation. The announcement of Quantum System Two, along with a healthy 2023 profit margin, has put IBM stock in a moderate buy position at the start of 2024. Thus, IBM is an AI stock to watch for coming quarters.

Microsoft (MSFT)

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When it comes to software, Microsoft (NASDAQ:MSFT) dominates market share, with over 70% of desktop computers worldwide running Windows. This puts Microsoft in a unique position to test and develop its artificial intelligence assistant, Copilot. 

Unlike the web access model of other AI chatbots, Microsoft Copilot is an enterprise software enhancement tool. Designed to pinpoint inefficiencies in workday use, it comes integrated with the Microsoft 365 suite, providing even more business functionality.

With the largest software user base in the world, Microsoft’s robust data provides an edge while developing AI. Microsoft may find its AI niche here as its software improves enterprise-level functionality. This, paired with the fact that Microsoft has experienced a 10.8% increase in share value in the last six months, along with the potential to become the most valuable company in the world, makes Microsoft a strong stock to buy.

Alphabet (GOOG, GOOGL)

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The discussion of AI stocks to watch can’t end without seeing what Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) has to offer. Alphabet threw its hat in the AI ring with the Bard model in March of 2023. It has been investing in upgrades ever since. 

With the release of Gemini Pro in late 2023 to enhance Bard’s capabilities, Alphabet closed the gap on ChatGPT. Now Gemini Ultra, aimed at release early this year, may make Alphabet the front runner in generative AI technology.

Alphabet’s stable stock performance, coupled with charged potential from investment into AI, makes it an incredibly strong option. Furthermore, Google Chrome is the browser of choice for over 60% of internet users. This puts Alphabet in a pole position when it comes to sheer data collection for training its Bard AI. Combine this with a predicted $340.61 billion in revenue for 2024, and you may just have a winner in the AI stock race.

On the date of publication, Viktor Zarev 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.

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