Best AI Stocks to Buy Now in 2023: Investing in Artificial Intelligence

John Choong

Artificial intelligence (AI) has been the main catalyst behind the stock market’s gains this year. As such, it’s been no surprise that the NASDAQ index which is home to many AI and technology companies, is in a bull market rally. So, here are the best individual AI stocks I’ve identified to invest in.

Also consider: Compare UK trading platforms to buy shares.

Remember: this list is not a personal recommendation and does not constitute financial advice. Do not buy these investments solely based on what you read in this article. These picks do not constitute personal recommendations or financial advice.

The Best Artificial Intelligence Stocks to Buy in May 2024

Taiwan Semiconductor Manufacturing Company logo


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Taiwan Semiconductor Manufacturing Company, otherwise known as TSMC, is a Taiwanese chip foundry and is the world’s biggest. It manufactures and designs a variety of advanced chips for the world’s largest tech and AI companies that include Apple, NVIDIA, AMD, and many others.

Those who are keen on getting exposure to artificial intelligence stocks but aren’t willing to overpay for it, may like TSMC (NYSE:TSM). A number of AI stocks such as NVIDIA may have seen their share prices jump by triple digits this year, but their future earnings may not end up justifying their current sky-high valuation multiples.

Nonetheless, if the optimistic outlook surrounding NVIDIA’s AI technology does come to fruition, there’s no bigger beneficiary than the very company that makes the chips that powers those chips.

As the Taiwanese fabricator begins production on its groundbreaking 3nm chips, clients like Apple are set to move their orders to more-efficient and smaller chips. This leaves a hole in TSMC’s 5nm production line. But with most of NVIDIA’s demand coming in the form of 5nm chips, that gap should be covered healthily and generate meaningful revenue for the chip manufacturer in the coming years as demand rebounds from its current slump.

Most AI stocks have shot up tremendously in value, causing their valuations to sky rocket. Having said that, due to the geopolitical risks surrounding China’s potential invasion on Taiwan, TSMC stock is trading at a tremendous discount relative to its peers. And if one can accept the geopolitical risks associated with investing in TSMC, they may end up becoming one of the best AI stocks to buy.

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ASML logo


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ASML is a Dutch chip equipment manufacturer and is renowned as the world’s leading supplier by far, for the semiconductor industry. It provides hardware, software, and services to top chip-makers around the world, such as TSMC, Intel, and Samsung.

Moving up the supply chain, ASML (NASDAQ:ASML) is another lucrative name among the many AI stocks out there. Although the Dutch equipment manufacturer doesn’t necessarily use artificial intelligence in its day-to-day operations, it does have indirect exposure to the market. This is because it supplies the machines TSMC uses to create chips for their clients, such as NVIDIA.

But what makes ASML so special is its incredible economic moat. That’s down to the fact that it’s the only company in the world that makes extreme ultraviolet lithography (EUV) machines. These machines are essential to making every single advanced processor chip in circulation today. And with the AI sector requiring an immense amount of computing power, ASML’s equipment will be at the forefront of the AI revolution.

Detractors will point to the fact that ASML stock currently trades at a relatively pricey valuation. Its trailing and forward P/E ratios sit comfortably in the 30’s, which is above the market’s average. That said, the premium can be justified considering the firm’s strong competitive advantage with no competitor close to replicating its offerings. And if NVIDIA’s projected demand for AI applications does come true, ASML’s current share price may look extremely cheap amongst the many top AI stocks out there.

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Microsoft Logo

3. Microsoft (NASDAQ:MSFT)

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Founded by renowned billionaires Bill Gates and Paul Allen in 1975, Microsoft is the world’s largest software company. It’s famous for its software products that include the world’s most used operating system in Windows, Microsoft Office, and the once known Internet Explorer browser which is now known as, Edge.

Arguably the catalyst that started the current rally in artificial intelligence stocks, Microsoft (NASDAQ:MSFT) is certainly another AI name to look out for. It all started when the tech giant bought a $13bn stake in an AI startup called, OpenAI. They’re the ones who pioneered the natural language processing chatbot, ChatGPT which has spearheaded the AI rally today, especially in the field of generative AI.

And with ChatGPT amassing hundreds of millions of users in just two months – faster than TikTok and Instagram – Microsoft opted to integrate its investment into its software applications, such as its Bing search engine. In addition to that, the chatbot’s various capabilities surrounding generative AI and machine learning have also been integrated into Microsoft’s other applications, such as Microsoft Office, Windows, and even Skype.

Considering the fact that Microsoft stock is also trading at a trailing and forward P/E in its 30’s, the shares may be a no-brainer given the tremendous amount of potential AI has. Machine learning could serve as a compounder in growing the enterprise’s offerings, productivity, and earnings. Therefore, Microsoft has to be one of the better AI and machine learning stocks now to invest in with its robust balance sheet and blue-chip status.

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Alphabet logo

4. Alphabet (NASDAQ:GOOGL)

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Alphabet is one of the world’s biggest companies by revenue and market cap. It’s the parent company of the search engine we all know and love, Google. It also earns sizeable revenues from its other services such as YouTube with exciting and new ventures in the pipeline, such as Waymo which plans to build self-driving cars on scale.

Google’s parent company, Alphabet (NASDAQ:GOOGL) is also one of the hottest AI stocks this year. Many had feared that Google would lose its dominant market position to Microsoft in the search and advertising space.

But despite having been on the losing end of the ‘AI battle’ early on, the conglomerate has shown just why it’s the leader in artificial intelligence. Alphabet has released its own set of generative AI products and even its own chatbot in Bard. This has been integrated with Google’s latest natural language processing model, PaLM 2 to have better generative AI and machine learning capabilities.

More importantly, Google plans to synergise AI technology into its applications as well. CEO Sundar Pichai confirmed the board’s intention to integrate Bard with its search engine and even previewed its generative AI capabilities in its other applications, such as Google Workspace. What’s more, there are plans to expand the use of AI in its cloud service, which would provide enterprise scale AI applications.

And with its DeepMind acquisition yet to show its full potential, it’d arguably be foolish to write Alphabet off as one of the top AI stocks without taking a second look – especially when its valuation multiples are much cheaper than its closest competitors.

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Tesla logo

5. Tesla (NASDAQ:TSLA)

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Tesla is the world’s biggest electric vehicle (EV) company. Aside from manufacturing EVs, Tesla also sells energy products and services, and is known as one of the largest global suppliers of battery energy storage systems through its stationary battery energy storage devices, solar panels, solar roof tiles, and other related products and services.

It may seem odd to feature Tesla (NASDAQ:TSLA) as one of the best AI stocks today given that it operates in the industrial and energy sectors. However, its explosive potential lies in self-driving cars, more specifically RoboTaxis.

Tesla’s cars already have some AI integrated into its cars to enable some form of self driving, but it’s the potential surrounding machine learning and AI that’s exciting. Data gathered from millions of journeys enables the EV maker to compile the world’s largest pool of driving data.

Such data, combined with AI modelling power, can be used to power its goals of launching its RoboTaxi. If successful, such a concept would be able to bring huge quality of life improvements to many, as it would be able to save people hours of commuting.

That being said, Tesla remains one of the pricier artificial intelligence stocks out there. With a trailing and forward P/E ratio that’s close to triple digits, it’s certainly pricey. But it’s also worth noting that Tesla is a growing company with plenty of earnings potential. If that potential ends up being fulfilled, especially on the AI front, the Tesla share price could be in for a ride back to its all-time highs.

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Nvidia Logo


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NVIDIA is a software and semiconductor company from the US. It designs graphics processing units (GPUs), application programming interface (APIs), as well as system on a chip units (SoCs) for the mobile computing and automotive market. Most recently, it’s been dubbed as a dominant supplier of AI hardware and software.

Last but not least, NVIDIA (NASDAQ:NVDA). Having been one of the biggest beneficiaries during the crypto boom, the graphics card maker is now moving into AI platforms, where CEO Jensen Huang has touted where its true potential lies.

NVIDIA stock has more than doubled in value this year and it’s no surprise either. The chip creator makes the world’s highest-performing microchips that are capable of powering AI software and services. And given that a sizeable chunk of NVIDIA’s profits are expected to come from mega clients like Amazon and Oracle who are pushing AI use cases in as many application as possible, NVIDIA will stand to gain massively from this.

Even so, one should be cautious about the stock’s current valuation. Even on a forward basis, NVIDIA’s P/E ratio sits at three to four times higher than the S&P 500‘s long-term average. While this isn’t too dissimilar from Amazon, the difference is that AI remains an industry without a track record of profitability, whilst Amazon’s cloud and e-commerce business does.

For that reason, investors should consider the risks with NVIDIA before buying its stock at its current levels. Nevertheless, a move down could present a lucrative buying opportunity given the incredible upside potential in earnings for decades to come.

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Amazon logo

7. Amazon (NASDAQ:AMZN)

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Amazon is an American multinational tech company with several business functions. Its most famous for its e-commerce business selling a wide variety of product categories, including electronics, apparel, furniture, food, and even groceries. It also has divisions in cloud computing (AWS), digital streaming (Prime Video), and AI. It is often regarded as one of the world’s most valuable brands.

Having seen its stock drop as much as 52% from its pandemic-era highs, Amazon (NASDAQ:AMZN) stock hasn’t gotten new life on the back of the recent AI hype. In the year to date, the shares are up by a handsome 50% and could have room to rally further given its potential in the AI market.

Aside from integrating AI into its everyday operations on the e-commerce front to help with cost and automation, Amazon’s potential lies on the cloud computing front with AWS. This should help to provide its clients with numerous automation applications as well as generative tools which could help to enrich the user proposition.

Critics will point to Amazon stock’s incredibly high P/E ratio of 300, but it’s worth starting that the e-commerce and cloud giant is recovering from its post-pandemic slump when profits tanked. Provided Amazon can achieve its previous levels of profitability, the stock would be trading at a much healthier valuation.

And when considering the incredible economic moat and diverse business Amazon possesses, it could be one of the more stable AI investments one could make in order to diversify their risk tolerance.

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Please note

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

AI-Specific Industries to Consider

Investing in AI is becoming increasingly popular as tech giants such as Microsoft, Alphabet,

and Tesla all offer exposure to the sector. Generative AI tech has been taken up by many industries including marketing, advertising, and video gaming.

But there is also growth potential in a number of other stocks outside big tech, such as drug development, robotics, and hardware providers. This potentially makes them lucrative investments for those looking to capitalise from investing in this area.

Healthcare and Genomics

Technology in AI is fuelling fast advancements in the healthcare and genomics fields, with AI models being used to analyse and interpret data more efficiently. Biotech and healthcare companies are leveraging machine learning tools for various applications such as creating personalised care plans, accelerating drug discovery processes, and even automating clinical documentation.

Investing in stocks of firms taking advantage of this groundbreaking tech could result in a very profitable investment. New drugs can come onto the market faster due to all these advances thanks to ML-powered solutions utilising big datasets available today.

Robotics and Automation

Investing in companies that leverage AI technology within robotics and automation can be a good opportunity to experience growth potential. Businesses such as Amazon are taking advantage of algorithms for their recommendation engines, which has had an effect on the stock market. Tesla is also heavily incorporating artificial intelligence into its EV production line, with self-driving cars being one of its main goals.

As we see more widespread implementation of these kinds of applications across multiple industries, it could be beneficial to invest money into stocks associated with them. But more lucratively, AI technologies will need continual updates and advancement if they want to remain relevant, so investing now might provide lucrative returns later down the road.

Hardware and Infrastructure Providers

AI companies need to consider not just AI-specific industries, but also hardware and infrastructure providers that enable the growth of AI capabilities. Two premier names in this sector are TSMC and Micron, who provide relevant products/services to fuel the oncoming AI revolution.

With their expertise, these two entities can offer dependable support for companies engaged in developing advanced artificial intelligence applications along with top notch quality when it comes to products as well as services.

Investing in AI ETFs

Investors can build an AI portfolio that is well-rounded and decreases the risks of investing in individual stocks from this sector by considering ETFs like Global X Robotics & Artificial Intelligence (NASDAQ:BOTZ) or ROBO Global Robotics & Automation (NYSE:ROBO). These funds offer exposure to a variety of companies working with AI technology and AI software.

Aside from these two, there are other investments such as single AI stocks which could be beneficial for investors seeking more direct engagement within the field itself.

Global X Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ)

Investing in the Global X Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ) — which consists of AI stocks — offers potential for growth as robotics and artificial intelligence become more common.

The fund contains 45 positions from companies involved with automation in the US, Japan, and Europe. In spite of that, investors should note that it is not particularly diversified. BOTZ charges an expense ratio of 0.69%, making it a relatively inexpensive option to invest in this specialised sector.

ROBO Global Robotics & Automation Index ETF (NYSE:ROBO)

The ROBO Global Robotics & Automation Index ETF (NYSE:ROBO) is a selection of 80 stocks connected to robotics and AI innovation, with Intuitive Surgical being its largest holding.

This ETF has an expense ratio of 0.95%, making it a slightly pricier ETF to invest in. Despite that, the ETF does provide investors diversified exposure to companies involved in harnessing technologies related to AI — thereby making it an excellent addition for those looking for investments within this sector.

Understanding AI Terminology

Best AI Stocks to Buy Now

It is essential to gain insight into core AI terminology in order for investors to make judicious decisions when investing in stocks of companies

involved with this technology. Through using algorithms, the abilities humans possess such as recognising patterns and predicting outcomes can be replicated through AI. These include machine learning, deep learning, natural language models, and computer vision.

Getting acquainted with these terms can help one to recognise the possible applications within businesses active in this area and their capacity for growth. This offers good investment prospects — a must-know factor if one wishes to invest successfully in artificial intelligence companies and the AI systems they use for business customers.

Risks and Considerations When Investing in AI Companies

When investing in AI companies, it’s important to thoroughly examine their financial standing and follow news about its latest developments. Be

cautious of businesses that show mediocre outcomes before rapidly presenting roadmaps for AI products or AI software as this might be a way of taking advantage of all the hype without proper foundation.

One should always bear in mind that developments regarding AI are still in its early stages. Thus, researching reputable companies with beneficial past performances and potential future benefits is better suited when making decisions about AI-related investments.

Best AI Stocks to Buy Now FAQs

What is the number one AI stock?

In my opinion, the number one AI stock to invest in is Alphabet. Google’s parent company is seen as a great opportunity for investors to gain exposure to the flourishing AI and cloud computing markets.

Which artificial intelligence companies are leading AI hardware and infrastructure providers?

AI is having an increasingly important role in the modern business world, and both TSMC and ASML have put themselves at the forefront of providing top-tier hardware solutions. Both companies are well equipped to capitalise on this trend through their quality products for AI systems.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

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