Artificial intelligence (AI) investing is in full swing. Companies making use of AI and selling AI products are seeing strong business growth and market enthusiasm, potentially making them great stocks to own right now.
However, there are plenty of AI stocks that should be avoided, as they’re overpriced with little to show for success. To help you avoid those stocks, I’ve got a look at some top AI stocks to buy in February.
Alphabet
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) has long been driven by CEO Sundar Pichai to be an AI-first company. This goal is becoming a reality, as AI is transforming all parts of Alphabet’s business.
Alphabet’s generative AI model, Gemini, which beat top competitor ChatGPT in many benchmarks, is already improving the Google search engine and giving phones like Samsung‘s S24 AI capabilities.
Alphabet’s primary business is advertising — with about 76% of revenue coming from ads — and it’s testing using generative AI to build better ad campaigns and bolstering search to draw in advertisers. With ad revenue growing 11% year over year in the most recent quarter, things are looking good.
Overall, Alphabet’s revenue rose 13% in Q4, and earnings per share (EPS) increased from $1.05 in the year-ago period to $1.64. That shows how strong this business is, yet the stock doesn’t demand the same premium as other tech companies.
It trades for 25 times earnings — about the same as the average of the S&P 500. Alphabet is an above-average company trading at market-average prices. As a result, investors shouldn’t be afraid to load up on Alphabet.
Taiwan Semiconductor Manufacturing Co.
Taiwan Semiconductor Manufacturing Co. (NYSE: TSM) is the world’s largest contract chip manufacturer. Because it doesn’t make chips for itself but for others, it can capitalize on nearly all areas of AI proliferation, as its cutting-edge chips are in nearly every piece of AI hardware.
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While these chips only make up a fraction of the overall AI revenue that comes from building data centers, according to Taiwan Semiconductor CEO C.C. Wei, it’s still enough that he…
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