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Which stocks will benefit from AI?

The future is being shaped by AI. The technology is poised to revolutionise how we live and work, with big ramifications for the workplace and industry. That’s why so many investors keep a keen eye on the sector, which some believe remains in its infancy.

With AI driving the engine of change, companies invested in the technology ,could be set to reap the rewards. Nigel Green, CEO of deVere, says the tech represents a real opportunity for investors, and has named his top 5 companies which could benefit from AI.

1. Tesla 

Elon Musk’s Tesla is on the event horizon of an AI big bang, analysts believe. The company’s new ‘Optimus’ robot has wowed observers, demonstrating that Tesla’s strength in the AI and robotic sector sees it poised for “explosive growth.” 

At the same time, the electric car company is accelerating toward an increased focus on self-driving technology, which some analysts believe will facilitate a major shift in focus for the firm, with AI and tech investors jumping on board, eyeing the potential benefits of driverless vehicles in industry.

CEO and founder of deVere, Nigel Green, has more than four decades of financial services experience and helms one of the world’s leading independent financial institutions – and he believes there is a real opportunity with Tesla. Commenting, he said: 

“Tesla has got all the data, and it’s going to benefit from AI. Don’t forget Elon Musk owns the X platform, and when you’ve got all the data from that, perhaps one day you could be ordering a self-driving taxi on the app. The ‘anything app’ could enhance Tesla, there is no question about it. Right now, there is an opportunity and Elon Musk knows it, the stock could do well.”

The comments come amid a ‘balls to the wall’ push by the Tesla CEO toward automated driving technology, with the reported aim of introducing the ‘Robo-Taxi’ to a cab rank near you.

2. Mercardo Libre 

Argentine e-commerce company Mercardo, recently announced its investment in new machine learning tech to help manage the shopping experience for its 40 million active users. It comes after the company reported investment in AI had helped boost active users by almost half, with sales up a fifth in 2023. 

The company, which has seen its share price grow by more than 145 per cent in the past five years, has “potential for massive growth”, Mr Green said, highlighting its forward-thinking investments in the AI sector: 

“It’s a platform like Amazon and it’s growing very rapidly. It’s in a good place and it is definitely in a position to go in demand from the digitalisation of financial services. Not only that, but its use of AI again means it could have massive potential for growth.”

Mercado was recently named a ‘top growth stock for the long-term’ by one equity research firm. The cash-rich company is set to see its revenue nearly double year-on-year in 2024, with analysts reportedly revising their share price forecasts for the stock upward in recent weeks.

3. Microsoft 

Household name Microsoft has avoided going the way of the Betamax because it’s managed to stay relevant and innovate decade after decade. Nigel believes the firm’s AI push could represent a ‘massive opportunity’ as it invests billions into the technology. He said: 

“Microsoft is in a great place, that company is going to continue to grow. It has after all got corporate chequebooks sending it money and with AI, it is going it is going to enhance, and is already enhancing businesses, and they can charge because they’ve got everyone’s data.” 

The US IT company is set to make a fresh $2.9 billion investment in AI and cloud infrastructure in Japan. Microsoft’s April announcement doubled its AI infrastructure in the country, a move they said would boost their efforts to help develop generative AI. 

The mammoth cash injection is the latest in a series of major investments by Microsoft as it battles to take the lead in the AI race in what is becoming a crowded field. This strong commitment has led the firm to be dubbed a “top AI winner” with its OpenAI platform expected to pay dividends.

4. Nvidia

In recent years American chipmaker Nvidia has seen its share price enter escape velocity, soaring from just $40 a share in 2019 to more than twenty times that number at its early 2024 peak. Its rise is credited to its commanding lead in the AI chip market, where it has benefited from a first-mover advantage. 

Despite a recent dip in its share price, analysts remain optimistic about Nvidia’s position, and its forward momentum. A recent analysis argued Nvidia stock ‘remains a bargain’ at just 31 times next year’s earnings and said the runway for generative AI will play out over the coming years – advising investors to think long-term. 

It’s a point Mr Green makes often, telling investors “It’s about time in the market, not timing the market.” Naming Nvidia among his top 5 stocks to benefit from AI he said:  

“It’s the company that makes the chips, it’s got a nice niche and it’s growing so quickly. It could continue to do extremely well and benefit from AI.”

5. AMD  

AMD is among Nvidia’s chief rivals in the semiconductor space – and while it’s often lesser mentioned than the kingpin, Mr Green believes there’s room in town for the both of them. He said: 

“There’s enough business for both of them. AMD has got the potential to grow and compete with Nvidia, there’s enough space in the market.”

Optimism abounds the competitor company, which has been forecast to beat expectations when its next earnings report is released on April 30.   

A recent analysis by Forbes praised AMD for its ‘smart strategy’, highlighting its focus on cost-effective computing, which they argue is underleveraged by Nvidia, and described AMD as “one of the most compelling companies working in AI chip development.”

AMD was recently described as a “stellar buying opportunity for long-term investors” by The Motley Fool, which named it a ‘viable alternative’ to Nvidia, saying the company had ‘a lot of room to grow.’

Why AI still has so much potential

AI has the potential to revolutionise operational efficiency and productivity in the industry. Through automation, AI can streamline processes, reduce costs, and optimise resources. Tasks that once required significant human intervention, can now be performed swiftly and accurately by AI algorithms, allowing tech companies to operate more efficiently and competitively in the market.

Investors are keen to make the most of the tech as it is on the way up, with fresh innovations and new value propositions around each corner. AI technology could present a compelling opportunity to make returns in a growing market which could redefine the way we live and work. 

Always speak to a financial advisor before making an investment decision.