Since the launch of ChatGPT early in 2023, companies have been falling over themselves to tout their artificial intelligence (AI) capabilities. That’s making it important for investors to define what puts a stock on their list of the best artificial intelligence stocks.
But that task is becoming more difficult. You know that something is approaching a mania phase when the word “bubble” is getting thrown around. That’s where investors have been for several months when it comes to AI.
This is particularly true of many small companies that are not profitable and have little to no revenue. A few of these high-upside AI stocks may deliver life-changing results. But many will not. And if you’re in the wrong ones, it may change your life in less fortunate ways.
The focus of this article is to help you identify AI stocks that fit a Goldilocks investment style. These stocks carry some risk in the short-term. However, if you’re looking for AI stocks that allow you to step away from your screen, here are three of the best artificial intelligence stocks.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) is low on risk. But with the stock trading at nearly $450 a share as of this writing, some investors may question if Nvidia is high on upside.
That’s a fair point, NVDA stock is expensive by any measure. And in the near term, there may be a pullback in NVDA stock. No stock moves in one direction all the time and all that jazz.
But if you look at NVDA stock as a long-term investment, it still makes the list of best artificial intelligence stocks. For AI to grow, it will need data and the chips with the speed to process it. That will give Nvidia a long runway.
Plus, institutions love Nvidia. The 65% of shares owned by institutional investors won’t win any awards. But in the last quarter alone, $591 billion poured into NVDA stock. And since the big money doesn’t enter a stock like Nvidia if they expect to lose money, it should put a high floor on NVDA stock.
Palantir (PLTR)
Palantir (NYSE:PLTR) recently reported earnings and met expectations on both the top and bottom lines. At a time when many stocks are priced for perfection, PLTR stock is down the day after earnings, as good enough just wasn’t good enough.
So, how is PLTR stock a solid choice for the long haul?
Simply put, Palantir has been “doing AI” for close to two decades, and as AI comes into sharp focus, the company is not resting on past laurels. It launched a new AI platform, AIP, that allows users to incorporate large language models into their internal networks. The platform will also allow personalized recommendations, actions and workflows based on proprietary data.
That’s one reason that Dan Ives of Wedbush recently initiated coverage on PLTR stock with a price target of $25 per share. It may not get to that price overnight, but investors should use pullbacks as an opportunity to accumulate shares.
H&R Block (HRB)
To this point, you’ve received one “no-brainer” AI stock with some growth concerns and one low-priced stock that may be too risky for some investors. However, the last stock on this list of best artificial intelligence stocks, may be your Goldilocks option.
H&R Block (NYSE:HRB), the tax company, is an intriguing option as AI begins to take over many mundane tasks like tax preparation. I’m not suggesting that AI will simplify the tax code. But, as InvestorPlace contributor Josh Enomoto recently pointed out, those individuals working in the gig economy (and that number is growing) have a different complexity when filing their taxes.
This will increase the likelihood of using tax professionals – possibly in the form of AI-powered chatbots – to help efficiently, and accurately, prepare your taxes.
Analysts view HRB stock as being fairly valued at the moment. However, with the likelihood of streamlined efficiency, the earnings outlook is favorable as is the future stock price.
On the date of publication, Chris Markoch had a LONG position in PLTR. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.