Artificial Intelligence is one of the fastest growing industries today. Investing in AI companies can significantly increase a portfolio’s profitability. However, the sector is also subject to geopolitics and negative market factors. In addition, some argue that expectations for the pace of development in the sector are exaggerated.
Despite this, investors seeking the opportunity to outperform inflation in modern technology. Here are the 5 best AI stocks to buy in November 2024. BeatMarket experts expect them to perform strongly over the next several years. The investments are designed for two main sources of profit. In addition to price appreciation, they offer passive income in the form of dividends.
Table of Contents
The Rise of AI
Today, machine learning is being used in all areas of life. For example, it is used for data processing in data centers. Large language models are capable of recognizing and generating text, etc. According to the disclosure policy, about 55% of existing companies use AI.
The total value of the market will reach $298 billion this year. At the same time, experts see good growth prospects until 2030. By then, the AI market could grow up to 20 times.
International Data Corp. predicts that AI will contribute $4.9 trillion to the global economy by 2030. This is expected to be 3.5% of global GDP. By 2024, the contribution to the economy is estimated at $1.2 trillion.
How to invest in AI stocks in 2024
To invest in AI stocks, you need to choose an intermediary that provides advisory or brokerage services. Then you can do it in two ways. First – buy or sell particular stocks of publicly traded companies. For example, from the list of top AI stocks below.
The second is to invest in ETFs that target stocks of AI developers and chip makers. Examples:
- Roundhill Generative AI & Technology ETF (CHAT);
- Invesco AI and Next Gen Software ETF (IGPT);
- Global X Artificial Intelligence & Technology ETF (AIQ).
The second option provides good diversification even with small investments. The advantage of the first approach is that you can add only the best of the best to your portfolio. However, this approach is mainly used by experienced investors.
Should you invest in best AI stocks?
This depends on your time horizon and risk tolerance. Keep in mind that investing in narrow sectors is riskier than buying funds based on the S&P 500.
Today, AI technologies are an actively developing sector with good prospects. However, some of the major players in AI may be overvalued.
As a result, financial experts argue that stocks in any one industry should make up no more than 10% of a portfolio. This ensures the right level of diversification. At the same time, it will increase the overall profit due to the booming sector.
Earn More With Dividend Stocks Than With Annuities for Your Retirement
The advantage of annuities is that they provide a guaranteed, predetermined amount. However, the investor’s return does not increase.
Cash flow from quality dividend stocks is likely to grow. In addition, taxes are calculated at a reduced rate for a long-term investor. Dividend payments are treated as long-term capital gains if a person has held the stock for the proper length of time.
A portfolio of first three Dividend Kings or Dividend Aristocrats stocks can guarantee dividend growth. The former increases the value of shareholder compensation for at least 50 years. The latter for 25 years or more.
Top 5 AI Dividend stocks to Watch in November 2024
1. Nvidia Corp. (NVDA)
Nvidia’s graphics accelerators are essential to machine learning. Today, the company controls more than 90% of the chip market. It provides a complete AI infrastructure for building and deploying integrated AI applications.
- Dividend yield – 0.03%.
- Payout ratio – 1.3%.
- Dividend growth over 5 years – 5%.
Disadvantage – Low dividends. Dividend payout ratio is only 1.3% against 41.6% for the technology sector. NVDA cut the bonus in 2021 and 2024.
Over the past 12 months, the stock performance has gained 186.94%. These are the best-performing stocks among the stocks analyzed.
2. International Business Machines (IBM)
International Business Machines is the number one AI patent holder in the United States. The company announced its leadership when the IBM Watson AI system beat the champions on Jeopardy. Since then, one of the best-performing AIs has found applications in medicine and other fields. More in-demand AI solutions:
- AIOps Insights;
- Robotic Process Automation;
- Security QRadar Suite, etc.
- Dividend yield – 3.26 %.
- Payout ratio – 64.88 %.
- Continuous growth – 28.
- Dividend growth over 5 years – 12%.
The company has increased its bonus for 28 years in concession. It is one of the Dividend Aristocrats. Disadvantage – Payout ratio is higher than average in the technology sector.
3. Microsoft Corp. (MSFT)
Microsoft is developing many AI-powered projects. The most interesting one looks like Copilot AI. It is a virtual employee that can read mail, automate routines, etc. AI models are also involved:
- in the Edge browser;
- Bing search engine;
- a set of services for personalizing Windows PowerToys for Windows 11, etc.
- Dividend yield – 0.8 %.
- Payout ratio – 25.41 %.
- Continuous growth – 20.
- Dividend growth over 5 years – 62%.
On November 16, 2024, Microsoft will be worth $3.09 trillion. Today it is the third largest company in the world. The dividend has increased for 20 years. The payout ratio is 1.6 times lower than average in the technology sector.
4. Texas Instruments (TXN)
Texas Instruments is a semiconductor and microchip manufacturer. The company is ranked 4th in the world and has a number of core competencies. Their vision processors enable many AI functions. For example, face recognition, pose estimation, etc.
- Dividend yield – 2.47 %.
- Payout ratio – 97.77 %.
- Continuous growth – 20.
- Dividend growth over 5 years – 91%.
The dividend yield is 2.47%. That works out to $5.2 per share per year. This amount has increased for 20 consecutive years. Disadvantage – high Payout ratio.
5. Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)
TSM is a Taiwanese AI chip contract manufacturer. The company works with Qualcomm, MediaTek, NVIDIA, AMD and others. Without its products, a breakthrough in the expert system is impossible. Samsung is considered to be the only significant competitor.
- Dividend yield – 1.32%.
- Payout ratio – 37.44.
- Continuous growth – 0.
- Dividend growth over 5 years – 41%.
Geopolitical tensions around Taiwan are an additional risk to AI investments through TSM.
FAQ
Are there any AI stocks that pay dividends?
Many large tech companies that are typically classified as growth stocks pay bonuses. The list of stocks above can be expanded to include issuers such as Alphabet (GOOGL) and Qualcomm (QCOM).
What is the best AI company to invest in?
The Motley Fool has positions in and recommends Microsoft. The Motley Fool recommends the following options:
- long January 2026 $395 calls on Microsoft;
- short January 2026 $405 calls.
Another promising company is Meta Platforms. CEO Mark Zuckerberg believes that Meta’s main achievement is a breakthrough in creating AI for translation.
What is the most promising AI company?
One of the best-performing stocks in 2024 is Nvidia. Its chips and software solutions are key to the development of the industry. Investors may also want to pay attention to IBM stocks. In the summer of 2024, the company said that the current value of orders for its AI products is $2 billion.
What are the best cheap AI stocks to buy now?
On a price-to-earnings (P/E) basis, the cheapest expert system corporations are Consensus Cloud Solutions (CCSI) at 5.5, Weibo Corp (WB) at 8.37, and Honda Motor Co Ltd ADR (HMC) at 6.62. But a low P/E multiple doesn’t indicate the most efficient stocks.
What stocks will boom with AI?
Beth Kindig of the I/O Fund believes that Nvidia’s market cap will reach $10 trillion by 2030. Analysts at The Motley Fool recommend or advise investors to buy stocks in Nvidia, Alphabet, Microsoft, Amazon, and Arm Holdings. The companies listed above are expected to see growth over the next few years.
