Investing in artificial intelligence (AI) has become increasingly challenging, with stocks like Nvidia, Super Micro, and CrowdStrike reaching high valuations. Despite this, experts believe AI is not just a temporary trend, and that investors can still find success by buying and holding promising AI stocks.
1. Palantir Technologies
Palantir Technologies (NYSE: PLTR) has seen its stock price quadruple since late 2022. In Q1 2024, revenue reached $634 million, marking a 21% increase year-over-year, with net income improving to $106 million—over six times from last year. The company is betting on its new generative AI product, AIP, which is reportedly yielding significant productivity gains for its users.
2. Alphabet
Alphabet (NASDAQ: GOOGL), the parent company of Google, has been involved in AI since 2001 and aims to stay competitive with its generative AI tool, Google Gemini. Despite perceptions of falling behind competitors, Alphabet boasts substantial liquidity of $108 billion and a P/E ratio of 28, making it a potentially attractive investment moving forward.
3. VanEck Semiconductor ETF
The VanEck Semiconductor ETF (NASDAQ: SMH) focuses on top chip stocks essential for AI technology. The fund allocates approximately 20% to Nvidia and 13% to Taiwan Semiconductor Manufacturing, with a 10-year annual return of 28%, significantly outperforming the S&P 500’s 13% over the same period. Its expense ratio stands at 0.35%, slightly below the industry average.
