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Artificial intelligence, automation and robotics are disrupting virtually every industry. In 2023, the world had a firsthand look at remarkable advances in AI technology, including OpenAI’s ChatGPT AI chatbot, Google’s Bard AI chatbot and GitHub’s Copilot AI code generation software. Whether it be machine learning, large language models, smart applications and appliances, digital assistants, synthetic media software or autonomous vehicles, companies that aren’t investing in AI products and services risk becoming obsolete. Countless companies stand to benefit from AI, but a handful of stocks have AI and automation as a central part of their businesses.
Here are 10 of the best AI stocks to buy, according to Argus Research:
| Stock | Implied upside from Dec. 5 closing price |
| Microsoft Corp. (ticker: MSFT) | 4.7% |
| Alphabet Inc. (GOOG, GOOGL) | 16.8% |
| Amazon.com Inc. (AMZN) | 12.3% |
| Nvidia Corp. (NVDA) | 28.8% |
| Meta Platforms Inc. (META) | 17.8% |
| Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) | 13.8% |
| Adobe Inc. (ADBE) | 1.3% |
| ASML Holding NV (ASML) | 22.4% |
| International Business Machines Corp. (IBM) | 2.2% |
| Arista Networks Inc. (ANET) | 4.3% |
Software giant Microsoft invested $1 billion in OpenAI in 2019 as part of a partnership that made Microsoft Azure OpenAI’s exclusive cloud provider, and Microsoft announced a new multiyear, multibillion-dollar investment in OpenAI in January 2023. Microsoft integrated ChatGPT into its Bing search engine in February. In September, Microsoft announced it is integrating its AI assistants into a single experience called Microsoft Copilot. Analyst Joseph Bonner says Microsoft is going “all-in” in enhancing its entire product portfolio by integrating AI systems, particularly in cloud services. Argus has a “buy” rating and $390 price target for MSFT stock, which closed at $372.52 on Dec. 5.
Google and YouTube parent company Alphabet uses AI and automation in virtually every facet of its business, from ad pricing to content promotion to Gmail spam filters. Google launched its Bard AI chatbot in March. In September, Google integrated Bard into its full suite of tools, including YouTube, Google Drive and Google Flights. In October, the company launched a new set of AI-powered search capabilities for the health care industry. Bonner says Google intends to apply further AI functionality to its search and advertising businesses in coming years. Argus has a “buy” rating and $153 price target for GOOGL stock, which closed at $130.99 on Dec. 5.
Amazon has integrated AI into every aspect of its business, including targeted advertisements, marketplace search and recommendation algorithms, and Amazon Web Services. Amazon’s AI-powered Alexa is one of the most popular virtual assistants and is already installed in many American households. Amazon offers a wide range of AI and machine learning services to its AWS cloud customers, including advanced text analytics, automated code reviews and chatbots. Analyst Jim Kelleher says AWS’ infrastructure-as-a-service leadership makes it uniquely positioned to capitalize on the early stages of the rapidly growing AI-as-a-service market. Argus has a “buy” rating and $165 price target for AMZN stock, which closed at $146.88 on Dec. 5.
High-end chipmaker Nvidia provides the massive processing power needed to run advanced AI applications. Nvidia has been the best-performing stock in the entire S&P 500 in 2023, and it’s largely due to the company’s AI exposure. Unfortunately, Nvidia’s international sales may take a hit from new U.S. export bans on sales of high-end AI chips to countries such as China, Iran and Russia. Kelleher says Nvidia shares still have upside ahead, thanks to the company’s central positioning in the AI hardware market. Argus has a “buy” rating and $600 price target for NVDA stock, which closed at $465.66 on Dec. 5.
Meta Platforms Inc. (META)
Meta Platforms is a market leader in social media and online advertising and is the owner of Facebook, Instagram and other platforms. The Wall Street Journal reported in September that Meta is developing a new AI system built to be as powerful as the most advanced OpenAI model. In October, the company began rolling out generative AI tools for advertisers that can create image backgrounds, variations of written text and other content. Bonner says Meta has become competitive in the generative AI space, and he expects AI to become even more prominent in Meta’s applications. Argus has a “buy” rating and $375 price target for META stock, which closed at $318.29 on Dec. 5.
Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)
Taiwan Semiconductor Manufacturing is the world’s largest pure-play semiconductor foundry. Taiwan Semi manufactures all the advanced AI semiconductors for Nvidia and other AI chipmakers. Booming AI chip demand helped offset Taiwan Semiconductor’s slumping smartphone and laptop chip sales in the third quarter. Kelleher says Taiwan Semiconductor’s AI chip demand continues to strengthen, but semiconductor inventory reduction has weighed on the company’s overall sales growth in recent quarters. He says the stock’s current price offers investors an attractive entry point into the leading merchant semiconductor fabrication company. Argus has a “buy” rating and $110 price target for TSM stock, which closed at $96.69 on Dec. 5.
Adobe produces creative content software and other applications used for marketing and e-commerce. The company’s Firefly generative machine learning model is already generating considerable customer interest across Photoshop, Illustrator and other platforms. Adobe has also applied its Sensei AI and machine learning technology to its Adobe Analytics, Campaign and Target products. Bonner says Adobe will continue to ramp up its investments in generative AI product extensions, and he says the company’s acquisition of collaboration platform Figma was a strategic deal, given the rise of remote and hybrid work. Argus has a “buy” rating and $610 price target for ADBE stock, which closed at $602.22 on Dec. 5.
ASML produces photolithography systems and other processing equipment used in semiconductor fabrication. ASML is the only major producer of the extreme ultraviolet lithography equipment needed to produce advanced AI chips. Unfortunately, ASML has said U.S. export controls will impact 10% to 15% of its current shipments to China, but it expects China demand will remain strong. Kelleher says growing demand for advanced semiconductor capital equipment solutions will support ASML’s share price, and he is bullish on the company’s strong financial profile and commitment to capital returns. Argus has a “buy” rating and $850 price target for ASML stock, which closed at $694.53 on Dec. 5.
International Business Machines Corp. (IBM)
For years, IBM has been developing ways to adapt its AI supercomputer Watson to revolutionize health care, finance, law and academia. IBM’s portfolio of Watson AI solutions includes applications to improve customer service, automate workflow processes and predict outcomes. In addition, IBM’s Watson Studio helps enterprise customers build proprietary AI applications. Kelleher says AI will play a central role in IBM’s future as customers upgrade their technology infrastructure. He says IBM’s open-source approach to Watsonx.ai is a unique contrast to the strategies of Google and Microsoft. Argus has a “buy” rating and $165 price target for IBM stock, which closed at $161.39 on Dec. 5.
Arista Networks Inc. (ANET)
Arista Networks supplies cloud networking solutions to internet companies, cloud service providers and enterprise data centers. Arista’s high-performance cloud networking solutions and high-throughput data center switches are necessary to provide the processing power for intensive AI workloads. In the second quarter of 2023, Arista launched a cloud-based, AI-driven network identity service for information technology operations and enterprise security. Kelleher says the expansion of generative AI applications has accelerated the demand for cloud-based data center networking to support large language models, creating a tremendous opportunity for Arista. Argus has a “buy” rating and $225 price target for ANET stock, which closed at $215.71 on Dec. 5.
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