HomeMost Popular Two AI Stocks to Buy Now ...

Two AI Stocks to Buy Now Durable Nasdaq History Bodes Well for 2024: AI Heavies for Investors

Actionable Trade Ideas

always free

The Nasdaq Composite has encountered turbulence in recent years, and yet remarkably, it has bounced back with vigor after each downturn. Akin to a phoenix rising from the ashes, the Nasdaq has shown resilience time and again, mirroring its meteoric rebounds in the early 2000s and post-2008 crash. Set against this historical backdrop, the prospects for the Nasdaq in 2024 appear bright, particularly in the context of the burgeoning artificial intelligence (AI) theme. In this light, investors would be well-advised to consider two prime AI stocks: Microsoft (NASDAQ: MSFT) and Meta Platforms (NASDAQ: META).

The Microsoft Marvel

Microsoft, an enduring stalwart in the technology sphere, has delivered a stellar performance in its fiscal landscape, culminating in surpassing revenue and earnings consensus estimates for the second quarter of 2024 (ending Dec. 31, 2023). This triumph is aptly reflected in the company’s stock, which has seen a remarkable surge of almost 54% over the past year.

Central to Microsoft’s recent ascent is its strategic embrace of generative AI through an enduring partnership with OpenAI, the developer behind ChatGPT. Notably, Microsoft’s Azure, the cloud computing juggernaut, has been rapidly seizing market share owing to its pioneering cloud-based AI services. Azure has solidified its position, now commanding a 24% share of enterprise spending on cloud infrastructure services in the fourth quarter, up from 23% in the previous quarter.

Azure has distinguished itself as a frontrunner in training and inferencing large language models, rendering it the preferred platform for AI workloads. Moreover, Microsoft’s adept strategy of offering a diverse array of AI software models and deeply integrated AI chips with Azure infrastructure has garnered a substantial user base, encompassing 53,000 Azure AI users. A third of these users gravitated to Azure within the past 12 months, underscoring AI services’ seminal role in augmenting Azure’s overall market footprint.

Not content to rest on its laurels, Microsoft has launched CoPilot, a suite of AI-powered features seamlessly embedded within its core products, engendering heightened productivity and efficiency. Furthermore, the company has widened CoPilot’s market reach by proffering out-of-the-box integrations with third-party applications. With widespread adoption anticipated across sundry sectors, CoPilot is poised to indubitably elevate the company’s average revenue per user in the ensuing months.

Beyond its foray into AI, Microsoft’s core PC and gaming businesses are evincing robustness and promise for expansion. While Microsoft’s stock may seem to be trading at somewhat lofty metrics — just under 37 times trailing-12-month earnings and about 13 times sales — this premium is commensurate with the company’s well-documented history of innovation and its prowess in the AI realm, rendering it an irresistible investment candidate for 2024.

The Meta Rebirth

Meta Platforms, after weathering a precipitous downturn in 2022, has staged a remarkable resurgence, with its shares skyrocketing by nearly 164% in the past year. Surpassing all expectations, the stock experienced a meteoric surge of almost 20% in a single day following its stellar fourth-quarter 2023 results and robust guidance for the first quarter of fiscal 2024.

Magna projects U.S. ad spending on social media platforms to rise by 11.9% in 2024, a propitious omen for Meta. Boasting a staggering 3.2 billion daily active users across its suite of applications (including Facebook, WhatsApp, Threads, Instagram, and Messenger), Meta is impeccably positioned to capitalize on this burgeoning market opportunity.

Moreover, Meta’s relentless focus on optimizing costs and enhancing efficiency has been instrumental in catapulting its operating margins to a remarkable 41% in the fourth quarter of fiscal 2023, marking a substantial ascent from the 20% in the corresponding quarter of the previous year.

Insider Intelligence envisions Meta accounting for a 20.4% share of U.S. digital advertising sales in 2024. To fortify its hegemony in the digital advertising sphere, Meta has progressively harnessed AI technologies to enrich user engagement and bolster ad performance across its social media platforms.

Meta has been unwavering in its efforts to unify its AI-powered video recommendation system across its entire suite of applications, aiming to furnish users with optimal content, thereby enhancing their experience. Additionally, the company is deploying AI-powered chatbot assistants to amplify user engagement and facilitate interactions with businesses and creators.

Meta’s ongoing investments in its AI-powered Advantage+ suite of solutions are tailored to empower advertisers to automate ad creation and audience targeting, concurrently managing costs. The company has also introduced generative AI features in ad creative tools, encompassing text variations and image expansion. Although nascent, these features are anticipated to emerge as substantial revenue contributors in due course.

While Meta’s stock is currently trading at 8.8 times its trailing-12-month sales, significantly higher than its five-year average of 6.8, the premium appears justified in view of the company’s vast and engaged user base, strengthening financials, and robust AI initiatives. Hence, the stock remains an enticing choice, even at its present elevated valuation levels.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for two decades, Motley Fool Stock Advisor, has more than tripled the market.*

They just revealed what they believe are the 10 best stocks for investors to buy right now… and Microsoft made the list — but there are 9 other stocks you may be overlooking.

See the 10 stocks

*Stock Advisor returns as of February 20, 2024

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Manali Pradhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Swing Trading Ideas and Market Commentary

Need some new swing ideas? Get free weekly swing ideas and market commentary from Jonathan Bernstein here: Swing Trading.

Explore More

Weekly In-Depth Market Analysis and Actionable Trade Ideas

Get institutional-level analysis and trade ideas to take your trading to the next level, sign up for free and become apart of the community.