9 of the Best AI Stocks in the Market

Tech breakthroughs over the last several decades, such as the rise of the internet and the smartphone, have created fortunes for Wall Street firms and everyday investors.

So, it’s no wonder many investors are now looking to artificial intelligence (AI) innovations for the next round of potentially life-changing gains. After all, AI is not just the most significant tech trend of 2023. It’s arguably the next step in humanity’s technological evolution.

Wondering how to invest in AI? You’re in the right place. In this article, we’ll examine nine of the best AI stocks and ETFs to date, bearing in mind that we’re likely to be in just the first few innings of the AI revolution, with plenty of opportunities still ahead.

What are AI stocks?

AI stocks are publicly traded shares of companies actively developing, implementing, or utilizing artificial intelligence technologies.

These stocks typically fall into one of two categories:

1. Blue-chip tech companies

These are the giants of the tech industry, such as IBM and Google’s parent company, Alphabet. They have well-established AI divisions and a proven track record of incorporating AI into their products and services. 

However, it’s wise to keep the age-old saying in mind: “Trees don’t grow to the sky.” In other words, these megaliths may not offer the same growth prospects as smaller-cap plays. Apple, Alphabet, and Microsoft already have market caps topping $1 trillion. It’s unlikely you’ll see exponential returns, though certainly not impossible.

On the other hand, many of these “usual suspects” pay dividends, passing on a portion of their multibillion-dollar profits to shareholders, so they can be a good option for investors who prefer cash returns. 

2. Smaller, experimental companies

These are often startups or smaller tech firms focusing exclusively on AI-related innovations. They might not have the blue-chip companies’ track record, market presence, or resources, but they can offer tremendous growth potential.

The moonshots and multi-baggers of the AI revolution are likely to emerge from this category, but it’s far from a sure thing. These investments are ideal for those willing to take on a bit more risk over a longer time horizon rather than retired investors more oriented to income-producing stocks.

High-performing AI stocks and ETFs

Now that you know the basic types, you’re probably wondering which AI companies to invest in. Let’s dig into nine of the top AI stocks and ETFs on the market.

AI Stocks:

Nvidia (NVDA)

Nvidia is a leading company in AI and graphics processing. It designs graphics processing units (GPUs) widely used in AI applications, such as deep learning and autonomous vehicles. While many chipmakers suffer boom-and-bust cycles, Nvidia has defied the odds to post 500%+ returns over the last five years. 

Alphabet (GOOGL)

As the parent company of Google, Alphabet is heavily invested in AI including the creation of BARD. Google’s search algorithms, voice assistants, and autonomous driving projects rely on AI technologies. Alphabet’s consistent innovation and market dominance contribute to its strong performance, with the stock more than doubling over the last five years—an impressive result for one of the world’s biggest companies.

IBM (IBM)

IBM has a long history—its name is virtually a synonym for stability and tradition. However, IBM is also making significant investments in AI. The company’s Watson AI platform is well-known and widely used across industries for its cognitive-computing capabilities. IBM will likely be a leader among the business giants competing for a slice of the AI pie.

Amazon (AMZN)

Amazon utilizes AI for its recommendation engine, logistics optimization, and cloud computing services through Amazon Web Services (AWS). As the world’s largest e-commerce and tech company, Amazon’s AI-driven innovations put it at the forefront of the revolution. It’s highly likely Bezos and co. will continue to push significant developments in the space, whether through in-house innovation or acquiring up-and-comers.

Microsoft (MSFT)

Microsoft has a dedicated division for AI research and development. The company leverages AI in its cloud computing platform, Azure, and integrates it into various products, including Microsoft 365 and the Azure AI platform. These and other AI initiatives have helped Microsoft deliver nearly 200% gains in the last five years. Not too shabby.

AI ETFs:

BOTZ (Global X Robotics & Artificial Intelligence ETF)

BOTZ exposes investors to a portfolio of global companies leading the robotics and AI industries. BOTZ has risen some 25% year to date, demonstrating the growth potential of these transformative technologies.

AIQ (Global X Future Analytics Tech ETF)

AIQ focuses on companies that utilize AI for data analytics and automation. It allows investors to benefit from AI’s impact on data-driven decision-making. The B2B sector is often more stable than B2C, making it easy to understand why investors find AIQ alluring. 

IRBO (iShares Robotics and Artificial Intelligence Multisector ETF)

Another solid B2B play—boasting greater than 90% B2B exposure—IRBO offers a diversified approach to robotics and AI investing across many sectors and industries.

ARKQ (ARK Autonomous Technology & Robotics ETF)

ARKQ is managed by ARK Invest, lauded for its innovative ETFs and perhaps even better known for its pioneering founder, Cathie Wood. ARKQ focuses on companies at the forefront of autonomous technology, including self-driving cars and drones.

(Need more ideas? Read up on other AI-oriented funds and strategies.)

How to invest in AI stocks with Composer

Ready to begin investing in AI stocks? Composer offers a user-friendly way to execute your AI stock trading strategy. Here’s a step-by-step guide to get you started:

1. Sign up to Composer for free

Begin by signing up for Composer’s 14-day free trial and creating your account. This trial period allows you to explore Composer’s features and functionalities.

2. Create a new symphony

Once you’ve logged into your Composer account, navigate to the “Create” button in the platform's top-left corner to build a new investment strategy, called a symphony. Click on “+ New Symphony” to start creating your AI-centric symphony.

3. Add your assets

Use the Asset function within Composer to build your AI stock portfolio. Search for an asset directly by entering the ticker symbol or screen for assets that meet specific criteria. You can specify multiple assets, specify the logic with trading indicators, and asset weights, to create a diversified portfolio.

4. Customize your symphony

Next, you can adjust the weight of each asset in your symphony. The “weight-equal” function ensures your investment is equally distributed among the selected assets, but you’re able to fine-tune the distribution in various ways. You can adjust asset weights, introduce more complex logic using sort functions and if statements, and even customize the rebalancing schedule.