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The Enduring Elite: 3 Top AI Stock Picks for the Long-Haul Investor

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Artificial intelligence (AI) is changing global industries.

As its relevance surges, comparisons to the Dot-Com bubble emerge. Unlike dot-com stocks, most AI stocks offer revenue-driving products, enhancing productivity for existing businesses. These aren’t the paper valuations we saw during the previous bubble.

But that’s not to say all AI stocks are worthwhile in this inflated market. While the AI trend could continue to provide many companies in this space with a boost, not all are worth buying. 

According to InvestorPlace’s Luke Lango, companies in various sectors are planning to increase AI investments. In fact, one such company revealed its plans to spend billions on AI models. Other big tech companies have reaffirmed their current AI investments. And I think more and more companies will rotate into this space.

Clear winners are forming at this juncture, and investing in these behemoths may be the best move. Let’s explore three AI stock winners worth buying for the long-haul.

Nvidia (NVDA)

Nvidia (NVDA) company logo displayed on mobile phone screen

Source: Piotr Swat / Shutterstock.com

Popularly known for reliable and fast GPU chips, Nvidia (NASDAQ:NVDA) has expanded into sectors like data centers and machine learning. Its dominance extends to robotics, gaming and other high-growth sectors as well. In mid-March, Nvidia introduced Project Groot for humanoid robots, updated its Isaac platform and launched Jetson Thor. Nvidia’s commitment to robotics is noteworthy, alongside its AI capabilities.

In a May 7 CNBC interview, Stanley Druckenmiller, who led Duquesne Capital Management, revealed he cut his Nvidia investment in late March, aiming to cash in on its recognized value. He initially invested during Q4 of 2022, acknowledging its generative AI potential. However, the recent Q1 AI stock surge surprised him. Details of his divestment will come from his firm’s upcoming 13-F reports.

Nvidia’s stock recovery lacked a specific trigger, but some investors saw the dip as a buying chance. Druckenmiller, not bearish on Nvidia, opted to take profits given the stock’s surge since his initial investment. Although Nvidia’s value exceeds $2 trillion, it may continue outperforming.

More insights are expected in the Q1 earnings report. NVDA has potential to exceed analyst expectations, despite bearish views forming from certain top-notch investors and traders.

Arista Networks (ANET)

Image of Arista Networks (ANET) logo on the side of a building

Source: Sundry Photography / Shutterstock.com

After surging 7% post-trading on May 7, Arista Networks (NYSE:ANET) shows that the company is a great option for investors looking to ride this AI wave. The company exceeded earrings estimates and reaffirmed a solid quarter outlook. Moreover, Arista Networks announced an excellent share buyback program for its investors. 

Further, the company’s Q1 earnings came in at $1.99 per share, exceeding analysts predictions of $1.74. Revenue rose 16%, amounting to $1.57 billion. This figure surpassed the market estimate, which was only $1.55 billion.

Additionally, Arista Networks anticipates current-quarter net sales will come in between $1.62 billion and $1.65 billion, with a midpoint of $1.635 billion. Notably, this should surpass analysts $1.62 billion consensus. The company benefits from high demand for cloud AI networking solutions, including Ethernet switches and routers. It drives continued stability in its top- and bottom-line results.

During the company’s recentearnings call ANET Chief Executive Officer (CEO) Jayshree Ullal expressed optimism on the company’s progress. Arista Holding’s 2.0 journey highlighted innovations and better customer traction. Moreover, its share buyback program expanded by $1.2 billion. Therefore, investors should seize this opportunity to invest in more ANET stock. Clearly, the company is heading toward a new all-time high. 

Meta Platforms (META)

In this photo illustration the Meta logo seen displayed on a smartphone and in the background the Facebook logo

Source: rafapress / Shutterstock.com

Investors shouldn’t avoid Meta Platforms (NASDAQ:META), especially now that it plans to use generative AI on its advertising features soon. These features enable advertisers to instantly create campaign copy and images, expand images and overlay text in various fonts.

A leader in AI innovation, Meta Platforms enhances user experiences to drive consistent growth. META’s AI platforms are widely accepted and now boasts millions of users. Llama 3 and other AI models integrate billions of parameters, ensuring high performance. Revenue from AI-powered products like Advantage+ has doubled, showcasing the practicality of the company’s AI’s business.

Impressively, over 3.2 billion daily users across META’s apps demonstrate its extensive market reach. Meta Platforms solidifies its position as a major tech player with billions of users, shaping the global digital landscape.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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

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