With platforms utilizing artificial intelligence (AI) continuing to move the needle, investors may want to consider positioning themselves in the most promising AI stocks to buy. Fundamentally, the sector may be one of the world’s most profound opportunities. In fact, according to Grand View Research, the global AI market reached a valuation of $136.55 billion in 2022. By 2030, the industry could command a revenue exceeding $1.8 trillion.
Most national GDP ratings don’t ring that high, underscoring the upside potential of the most promising AI stocks to buy. At the same time, it’s difficult to figure out which names will rise the most. As my friend used to say, opinions are like [rear quarters] – everybody has one. So, how do retail investors separate hype from substance?
To answer that, all the names above feature at minimum a consensus analyst rating of moderate buy. As well, the ideas are ranked based on a combination of buy rating strength and upside price target. So, if you’re ready, let’s talk about the most promising AI stocks to buy in Feb.
A cloud-based data specialist, Snowflake (NYSE:SNOW) offers data storage and analytics service under what it terms data as a service. According to its website, Snowflake designed its platform from the ground up to support machine learning and AI-driven data science applications. Therefore, it cuts a practical profile when it comes to the most promising AI stocks to buy.
Financially, Snowflake’s top attribute centers on its balance sheet. Per data from Gurufocus.com, the company commands a massive cash-to-debt ratio of 15.51 times. In contrast, the sector median value sits at 3.08 times. As well, the company’s Altman Z-Score hits 18.35, reflecting extremely low bankruptcy risk.
On the operational end, Snowflake’s three-year revenue growth rate (on a per-share basis) currently soars in triple-digit territory. Unfortunately, the data firm consistently posts net losses. Therefore, its valuation against traditional benchmarks remains suspect.
However, out of 25 analysts, the consensus rating comes down to moderate buy. And while its upside price target only leaves room for 2% growth, this year’s tremendous momentum suggests more good things to come.
An Irish-American professional services firm, Accenture (NYSE:ACN) specializes in information technology services and consulting. Per its website, Accenture offers AI consulting services and solutions, enabling its enterprise-level clients to achieve their business objectives faster. As with Snowflake above, ACN represents one of the practical cogs of promising AI stocks to buy.
On the financial spectrum, Gurufocus.com labels Accenture as modestly undervalued based on its proprietary calculations for fair market value (FMV). Objectively, the company enjoys a stable balance sheet, undergirded by an Altman Z-Score of 7.17 (well into the safe zone).
Operationally, Accenture features a three-year revenue growth rate of 13%, beating out almost 65% of the competition. On the bottom line, its net margin stands at 11.3%, outpacing over 80% of its peers. As well, Wall Street analysts rate ACN as a consensus moderate buy. Their average price target stands at $301.22, which right now implies growth of only 2.4%. However, shares gained nearly 9% this year, which may suggest further momentum.
A multinational computer technology firm, Oracle (NYSE:ORCL) was the third-largest software company in the world by revenue and market capitalization in 2020. According to its website, Oracle features an AI ecosystem that focuses on accelerated infrastructure and machine learning services. Although ORCL suffered a choppy time in 2022, in the trailing year, shares gained 9%.
Presently, Gurufocus.com labels Oracle as a fairly valued enterprise. Operationally, the company features a three-year revenue growth rate of 12.9%. On the bottom line, its net margin stands at over 19%. This ranks better than over 90% of the competition.
To be fair, the main drawback for ORCL has to be its balance sheet. With an Altman Z-Score of 1.38, Oracle technically wades in distressed waters. Nevertheless, according to Wall Street analysts, ORCL ranks among the AI stocks to buy. Presently, they peg shares as a consensus moderate buy. Also, their average price target of $96.71 implies an upside potential of over 8%.
World famous for its software and increasingly its hardware too, Microsoft (NASDAQ:MSFT) offers an excellent idea for practically any circumstance. However, it easily ranks among the top AI stocks to buy. Recently, Microsoft made waves for its significant investment into OpenAI, the company that developed the ChatGPT chatbot. Right now, ChatGPT is all the rage, empowering greater utility for internet-based protocols.
Financially, the case for MSFT as one of the AI stocks to buy speaks for itself. Per Gurufocus.com’s proprietary FMV calculation, it’s a modestly undervalued business. Over the last three years, Microsoft’s sales growth rate hit 17.4%, outpacing over 72% of its peers. Further, its net margin stands at nearly 40%. This basically smokes just about 97% of the industry.
Not surprisingly, Wall Street analysts rate MSFT as a consensus strong buy (out of 29 experts). Further, their average price target stands at $276.09, implying an upside potential of over 4%. If you want a steady hand in your portfolio of AI stocks to buy, Microsoft is it.
Alphabet (GOOG, GOOGL)
To be sure, the king of the internet Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) did not enjoy a stellar 2022. Even with positive sentiment becoming the dominant theme early in 2023, GOOG still has some ways to go. In the trailing year, GOOG fell nearly 24%. Nevertheless, the stock did swing higher by over 21% since the January opener. Further, patient investors of AI stocks to buy should see greater returns.
Fundamentally, it comes down to the critical nature of Alphabet’s Google ecosystem. From search to email to social media, Google has its hands in practically everything. Further, the company continues to research how machine learning can promote better outcomes for the environment and for underdeveloped communities. Therefore, Alphabet embodies a balance between the practical and the aspirational.
Out of eight analysts, GOOG enjoys a unanimous strong buy view. As well, their average price target stands at $122.50, implying an upside potential of almost 13%. Even better, sentiment among hedge funds rates as very positive. This provides confidence that GOOG ranks among the AI stocks to buy.
Best known for its online marketplace and thus revolutionizing e-commerce, Amazon (NASDAQ:AMZN) needs no introduction as a business enterprise. However, it’s also flexing its muscles in several relevant arenas, making AMZN one of the AI stocks to buy. Specifically, the company’s AWS cloud platform offers a range of AI and machine learning services.
To be fair, AMZN took a beating in 2022, with skyrocketing inflation taking a bite out of its perceived viability. However, this year, it’s looking to turn things around. Since the January opener, AMZN gained more than 31% of equity value, simply a stunning figure.
Financially, Amazon still kills it in the revenue department, posting a three-year sales growth rate of 25.1%. This stat beats out 87% of its rivals. Also, Gurufocus.com labels AMZN as significantly undervalued based on its proprietary FMV calculations.
Perhaps most importantly, analysts peg Amazon as a consensus strong buy. Additionally, their average price target of $131.39 implies an upside potential of over 16%.
Specializing in cybersecurity technology, CrowdStrike (NASDAQ:CRWD) is one of the most relevant AI stocks to buy. With cyber threats materializing all the time, CrowdStrike needs to stay on top of potential vulnerabilities. Therefore, it must invest heavily in AI and machine learning protocols. For full disclosure, CRWD did get beat up in 2022. However, since the January opener, shares gained over 12%.
Fundamentally, I expect the company to continue moving forward. Survey after survey reveals that cyberattacks have only increased throughout the post-pandemic new normal. Financially, then, it’s encouraging that Gurufocus.com labels CRWD as significantly undervalued. Objectively, the company enjoys a massive three-year revenue growth rate of nearly 64%. While it can’t be expected to maintain this revenue velocity, the industry need should keep CrowdStrike’s lights on.
Better yet, out of 37 analysts, 33 of them offer an optimistic view, yielding a consensus strong buy assessment. In addition, their average price target stands at $162.59, implying an upside potential of over 40%. Therefore, it’s one of the top AI stocks to buy.
On the date of publication, Josh Enomoto 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.
Blue-Chip Stocks, Undervalued Stocks