With artificial intelligence rapidly becoming a hot topic, investors ought to consider AI stocks to buy. According to Grand View Research, the global AI market size reached a valuation of $136.55 billion last year. Experts there project that the segment will expand at a compound annual growth rate (CAGR) of 37.3% from 2023 to 2030. At the culmination of the forecasted period, the industry should hit $1.81 trillion in sales.
However, like any other sector, investors can choose to dial up their risk profile in exchange for the possibility of higher rewards. Here’s the deal: all of the below ideas for AI stocks to buy should be considered speculative. Nevertheless, they may also enjoy the catalysts to double your investment.
Micron Technology (MU)
A specialist in computer memory and data storage systems, Micron Technology (NASDAQ:MU) offers significant relevancies as one of the AI stocks to buy. According to its website, the company is powering a new generation of faster, intelligent, global infrastructures that make mainstream AI possible. Since the start of the year, MU gained over 16% of equity value.
Financially, the company benefits from decent stability in the balance sheet. For example, Micron’s equity-to-asset ratio is 0.71 times, above the sector median value of 0.64 times. Also, its Altman Z-Score pings at 3.65, indicating modestly low bankruptcy risk in the next two years.
Further, the market prices MU at 1.36-times book value. In contrast, the sector median is at a lofty 2.47 times. Finally, Wall Street analysts peg MU as a consensus moderate buy. On average, their price target stands at $68.61. At the highest level, one expert sees shares hitting $100. If so, that would imply nearly 71% upside.
A cybersecurity technology firm, CrowdStrike (NASDAQ:CRWD) provides cloud workload and endpoint security, threat intelligence and cyberattack response services. According to the company’s website, CrowdStrike’s threat hunters harness AI-generated alert signals, hypothesis testing and advanced tools to investigate and stop the most sophisticated threats. Since the start of the year, CRWD gained nearly 24% of equity value.
Financially, the company benefits from decent (though not great) stability in the balance sheet. Notably, its Altman Z-Score pings at 5.51, reflecting low bankruptcy risk. Operationally, CrowdStrike’s three-year revenue growth rate comes in at 43.5%. This stat ranks better than 91.6% of competing AI stocks to buy. Also, the company’s gross margin hits 73.17%, outpacing 80% of its peers.
Lastly, covering analysts peg CRWD as a consensus strong buy. On average, their average price target stands at $164.33, implying almost 29% upside potential. However, the most optimistic target hits $235, implying upside of nearly 84%.
Duos Technologies (DUOT)
Headquartered in Jacksonville, Florida, Duos Technologies (NASDAQ:DUOT) is an intelligent automation platform that helps customers move commerce more safely and efficiently. One of the most advanced AI stocks to buy, Duos features pioneering visualization systems that may help undergird greater achievements in digitalization. Since the beginning of the year, DUOT shot up almost 80%. However, in the trailing year, it’s down 20%.
Although an enticing enterprise, Duos will require incredible patience. One of the few main positives here is that it could be modestly undervalued. Specifically, the market prices DUOT at a trailing sales multiple of 1.7. As a discount to revenue, Duos ranks better than 62.76% of the competition.
However, investors should be aware that on the balance sheet, Duos’ Altman Z-Score sits at 4.16 below parity. That indicates significant distress. Still, Edward Woo of Ascendiant pegs DUOT a buy, with a $5.25 price target that implies over 39% upside potential. Given the speculative appeal, it’s possible that shares could drive much higher.
Headquartered in Santa Clara, California, Ambarella (NASDAQ:AMBA) is a fabless semiconductor design company, focusing on low-power, high-definition and Ultra HD video compression, image processing and computer vision processors. It’s one of the top AI stocks to buy because the company specializes in AI vision processors for edge applications. Unfortunately, since the start of the year, AMBA slipped nearly 11%.
However, Ambarella could be a diamond in the rough. On the balance sheet, its cash-to-debt ratio stands at nearly 24 times, beating out 78.53% of its competitors. Also, its equity-to-asset ratio is 0.85 times, ranked above the sector median value of 0.64 times. Lastly regarding its financial stability, Ambarella’s Altman Z-Score is 16.52, indicating extremely low bankruptcy risk.
Currently, covering analysts peg AMBA as a consensus strong buy. On average, their price target stands at $101.02, implying over 42% upside potential. However, the most optimistic target is $120, implying upside of 69%.
A Chinese multinational technology firm, Alibaba (NYSE:BABA) specializes in e-commerce, retail, Internet, and technology. The company provides consumer-to-consumer, business-to-consumer, and business-to-business sales services via web portals, as well as electronic payment services, shopping search engines and cloud computing services. It’s one of the heralded AI stocks to buy because it leverages intelligent digitalization to facilitate improvements across its businesses.
Broadly, Alibaba enjoys strong financial metrics, making it a compelling idea. For one thing, the company’s cash-to-debt ratio is 3.25 times, ranked above 80.46% of its peers. Operationally, Alibaba’s three-year revenue growth rate pings at 32.1%, above 90.13% of rivals. Also, its operating margin is 12%, above 84% of the competition.
As a bonus, the market prices BABA at a forward valuation of 11.37. As a discount to projected earnings, Alibaba ranks better than 69.61% of the field. In closing, analysts peg BABA as a unanimous strong buy. On average, their price target stands at $149.74, implying nearly 46% upside potential. At the highest level, we have a price target of $220, which implies growth of 114%.
A Chinese e-commerce firm, JD.com (NASDAQ:JD) is one of the other biggest names in business-to-consumer retailing in China. Fundamentally, JD ranks among the top AI stocks to buy because the platform will incorporate a ChatGPT-style product. With the AI-driven chatbot becoming rapidly popular, JD.com might benefit from the wider momentum in the space. Unfortunately, since the Jan. opener, JD slipped more than 29% of equity value.
Financially, the enterprise benefits from a few key attributes. On the balance sheet, its cash-to-debt ratio hits 3.38 times, ranked better than 80.91% of its peers. Also, its debt-to-equity ratio is 0.31 times, favorably below the sector median of 0.64 times.
Operationally, JD.com’s three-year revenue growth rate pings at 19.4%, above 82.48% of the field. Also, its book growth rate during the same period is an impressive 34.3%. At the moment, analysts peg JD as a consensus strong buy. Their average price target stands at $70.43, implying nearly 73% upside potential.
Based in Maryland, BigBear.ai (NYSE:BBAI) offers intelligent analytics and cyber solutions. It’s already enjoyed tremendous growth this year, shotting up nearly 244% since the Jan. opener. At the same time, BBAI represents one of the most speculative ideas among AI stocks to buy. Frankly, I wouldn’t mention it here but analysts may be warming up to the idea.
However, investors shouldn’t expect a boatload of Wall Street experts to embrace BBAI. For one thing, shares hemorrhaged more than 78% of equity value in the past 365 days. Further, it mostly features terrible financials. As an example, its balance sheet is awful. Its Altman Z-Score pings at 1.95 below breakeven, indicating severe distress.
It almost goes without saying that the company suffers from negative margins. Therefore, it suffers from a credibility crisis. That said, covering analysts peg BBAI a moderate buy. Their average price target stands at $79.28, implying over 79% upside potential.
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.