Best AI Stocks for September 2024

After several quarters of relentless growth, artificial intelligence stocks have hit a deflating slowdown. For some investors, that may have been disheartening. But for those who believe in the long-term value of AI technology, the pullback might just be a dip in the road.

Numerous factors have contributed to the sluggish performance of AI stocks, including poorer-than-expected quarterly earnings, geopolitical anxieties, and concerns over the state of the economy. But, in general, they can boil down to a disparity between investors' expectations and concrete results. For example, when Microsoft (MSFT) reported double-digit revenue growth in July, the stock still fell 3% in after-hours trading due to downbeat growth in its intellect-cloud segment. A similar trend was observed in Alphabet (GOOGL), Tesla (TSLA), and Amazon (AMZN).

Even Nvidia (NVDA), the poster child of the AI revolution, has been susceptible to declines. The company briefly became the most valuable firm in the world before shedding 13% of its stock price in three days of trading in June.

Pullbacks in AI stocks may continue as investors self-correct expectations, which could create buying-in opportunities for others. Below, we explore the best AI stocks for September 2024, considering those with the best value, fastest growth, and most momentum. Data are current as of Aug. 12, 2024.

Best Value AI Stocks

Value investing is a strategy based on the principle that some stocks trade at prices that are below their intrinsic value. Investors able to identify these stocks, usually through analysis of fundamental metrics, may be primed for a return on their investment when the market corrects the mispricing and the stocks rise. One such metric is the price-to-earnings (P/E) ratio. Lower P/E ratios are generally considered to be signs of a more attractively valued company since it is valued at less than its fundamental value.

• Consensus Cloud Solutions: This is a digital information company that provides cloud fax technology, with a scalable software-as-a-service (SaaS) platform. One of the company's products is Clarity CD, which uses AI technology to extract structured data from unstructured documents, like PDFs, for improved workflow.
• Weibo Corp.: Weibo is a Chinese social networking company known for its microblogging service Sina Weibo. Earlier this year, Weibo integrated an AI chatbot component into its platforms in a bid to boost engagement.
• Honda Motor Co., Ltd.: This is a Japanese auto manufacturer that sold 26.7 million units in the last reported fiscal year. The company recently announced plans to expand into the AI-based autonomous vehicle space, including a driverless ride-hail service that it expects to launch in Japan in 2026.

Fastest-Growing AI Stocks

Investors often evaluate growth stocks based on revenue and earnings per share (EPS), as these are key measures of a company's performance. Looking at only one of these two factors, however, can leave your search susceptible to temporary phenomena, including tax law changes or one-off gains.

We aim for a more balanced screen of AI growth stocks by looking at the most recent year-over-year percentage growth for both revenue and EPS, giving each equal weighting. We also exclude companies with growth rates in either category of 1,000% or more on the grounds that these are likely outliers.

• Nvidia Corp.: A chip manufacturer that provides computer graphics processors, chipsets, and related software, Nvidia was the best-performing stock in the S&P 500 for 2023, more than tripling in value during the year. It was briefly the largest company in the world by market cap in June 2024, before falling into a price correction.
• Immatics N.V.: A German clinical-stage biopharmaceutical company researching potential immunotherapies for the treatment of cancer, Immatics uses its immunoinformatics platform XCUBE, powered by AI, to discover and develop therapeutics.
• Super Micro Computer Inc.: This is a computing hardware company and a leader in the AI server market. The company recently posted strong annual revenue growth and a 10-for-1 stock split on its fiscal fourth-quarter earnings report.

AI Stocks With the Most Momentum

Momentum investing is based on the principle that stocks that have increased at a faster rate compared with the market or their peers are likely to continue on that trajectory, at least in the short term, as long as there aren't fundamental changes to those companies' operations or the broader industry.

Below, we look at the AI stocks that have provided the highest total return in the last 12 months.

• GeneDx Holdings Corp.: This is a genetic testing company that provides exome and genome tests used to develop personalized health plans and accelerate drug development. GeneDx uses machine learning tools to facilitate analysis of its rare disease data set.
• Celestica Inc.: Celestica is a supply chain solutions, electronics manufacturing, and logistics company that also provides connectivity and cloud services. Many of Celestica's products, including Ethernet switches, are key to the infrastructure of data centers and AI platforms.
• MicroStrategy Inc.: MicroStrategy Inc. is a business solutions, cloud services, and mobile software company that has in recent years become the world's largest corporate bitcoin holder, with more than 226,331 tokens as of June 20, 2024.

Advantages of AI Stocks

Broad applications: AI has transformed—or has the potential to transform—a host of different industries and sectors. Companies positioned as leaders within the AI space could be well-positioned to benefit from widespread adoption and a broad, diverse customer base.

Fast-moving innovation: AI is at the forefront of innovation today, with both major tech firms and smaller up-and-coming companies working diligently to advance this technology. This means that the potential for breakthrough success may be huge as the industry continues to evolve.

Popularity: As of mid-2024, AI is still one of the most talked-about trends in technology. Interest in this space is very high, meaning that investors could be poised to benefit from tremendous momentum with the right investments.

Disadvantages of AI Stocks

Industry uncertainty: Although AI has been in existence for decades, it is only in the last several years that technological developments have brought this field into the mainstream. With changes and advancements happening incredibly quickly, it can be difficult for even the most knowledgeable investors to keep pace with what is happening in the industry. For instance, this means it could be easy for investors to get caught up in the hype surrounding a particular company after the ideal time to purchase that company's stock.

Untested companies: While many of the major tech firms are involved in AI, other AI companies have little history and foundation for investors to consider when selecting investments. These companies may pose a greater risk than more stable, time-tested firms.

Dangers of AI: Leaders in computer science and related fields have warned of the potential dangers associated with AI. As the field continues to expand and change, public opinion, regulations, and other factors may change and have the potential to impact AI stocks in unexpected ways.

The Bottom Line

AI stocks present investors with the opportunity to tap into one of the most popular—and potentially most revolutionary—technology trends today. With companies across virtually all industries and sectors exploring ways to integrate AI into their operations, firms that are focused on the hardware and software required to run AI programs stand to benefit. But there are significant risks to investing in AI stocks, including the uncertain future of the industry and the potential dangers of AI technology itself.

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As of the date this article was written, the author does not own any of the above securities.