7 Best Performing AI Stocks for November 2024

AI stocks have seen meteoric growth in 2024. NVIDIA in particular has hogged much of the attention due to its sharp rise in value.

And while there has been speculation that the hype around AI might be overblown or that geopolitical issues might hamper the semiconductor development that is critical to AI’s success, NVIDIA continues to outpace its competitors from afar.

Here are the seven best-performing stocks in the Indxx Global Robotics & Artificial Intelligence Thematic Index, ranked by one-year return. This list is updated weekly.

Upstart is an AI lending marketplace that connects users to banks and credit unions to help them find personal, auto, and refinance loans. The platform also offers home equity lines of credit and small “emergency” loans. Upstart says it has nearly three million customers and that its AI technology helps lenders approve more people from marginalized communities.

SoundHound AI creates voice-based AI products, such as a voice assistant for restaurants that allows customers to place orders, ask questions about schedules, and create reservations. In addition to the restaurant industry, SoundHound also creates products for the automotive and hospitality industries. The company has an impressive client list, including Hyundai, Pandora, KrispyKreme, White Castle, Toast, and Square.

NVIDIA began working on 3D graphics for multimedia and gaming companies in 1993. The company also began creating AI applications as early as 2012. Today, NVIDIA continues to be at the forefront of AI and develops AI-related software, chips and services. .

AI stocks are stocks of companies that work in the field of artificial intelligence. There are many applications for AI, and therefore a wide variety of AI titles: Some AI companies create speech recognition software. Others create pilotless planes.

Several publicly traded companies have substantial interests in AI and are poised to benefit from the sector’s growth, according to Haydar Haba, founder of Andra Capital, a venture capital firm that invests in AI companies. .

AI stocks tend to fall into one of two categories: blue chips technology companies that have invested in or partnered with AI developers, as well as small experimental companies focused entirely on AI development.

Stocks of smaller AI developers may seem like the most “direct” investments in AI, but Michael Brenner, a research analyst who covers AI for FBB Capital Partners, says they are not necessarily the best investments in AI.

“Large language models require a huge amount of data and a huge amount of capital to put together,” says Brenner.

Brenner notes that smaller companies can develop innovative new models on their own, but will eventually need to partner with a larger company with more infrastructure in order to operate these models on a commercial scale.

“So far, we’ve been sticking more to mega-cap tech companies,” says Brenner, referring to FBB Capital Partners’ AI portfolio.

If you are very new to stock trading and want to invest in AI stocks, the first step is to open an brokerage account.

From there, you’ll need to decide what type of AI stock exposure you want. Individual AI stocks can potentially offer high returns, but require taking on a lot of risk, upfront expenses, and research work.

Another option is to invest in AI stocks through AI-focused pool exchange-traded funds.

Haba said investors can also gain exposure to AI stocks through exchange traded funds which invest in a basket of companies involved in the development and implementation of AI.

There are several AI stock indices, such as the Indxx Global Robotics & Artificial Intelligence Thematic Index and the Nasdaq CTA Artificial Intelligence & Robotics Index, which are tracked by ETFs.

You can also find AI ETFs in an ETF filter by searching for “artificial intelligence,” “machine learning,” or “AI,” but be sure to research any ETF you find this way thoroughly.

Some ETFs with “AI” in their names invest in AI-related companies. But others are diversified ETFs that use AI-based trading and are not necessarily invested in AI stocks.

In early 2023, some small companies saw their stock prices rise rapidly after being mentioned in any sort of AI-related news. In January 2023, for example, BuzzFeed (BZFD) saw its stock price soar by more than 85% the day after publishing a story about a partnership with OpenAI to develop a data editor powered by ‘AI.

Haba said there are signs that investors may be too enthusiastic about the potential of AI at present.

“AI has been used as a buzzword to generate stock price premiums, but companies have not always demonstrated the use of cutting-edge techniques,” he said.

“In private markets, we see hundreds of millions of dollars flowing into AI companies whose products are not market fit. Even if investors justify such investments based on growth potential, it remains unclear whether this potential can or will ever be monetized,” Haba said.

Brenner also acknowledges that some AI-related companies have seen their valuations rise sharply without major changes in their business fundamentals.

However, Brenner doesn’t think the current surge in interest in AI amounts to a bubble, as many indications of technological stocks are still below their previous highs.

“On a macro level, it’s hard to say we’re in a bubble, because we haven’t reached an all-time high,” says Brenner.

Investors should think carefully before purchasing individual stocks or narrowly focused ETFs. Focused investments may be riskier than broader investments, such as S&P 500 index funds, which have a long-term investment. average annual yieldwithout taking into account inflation, around 10%.

One guideline that can help limit this additional risk is to dedicate no more than 10% of your overall portfolio to individual stocks.

But if you’re financially secure enough to buy individual stocks, Brenner says AI stocks are worth considering.

“I think retail investors should think about the impact of machine learning on the stocks they own,” he says.

“For individual investors looking at individual stocks in their 401(k), if they can withstand the volatility of individual stocks, investing in AI-related companies as part of a diversified portfolio could make sense “, explains Brenner.