3 Leading AI Stocks to Watch Across Various Industries

September 17, 2024 02:23 AM PDT | By Team Kalkine Media

3 Leading AI Stocks to Watch Across Various Industries — Image source: shutterstock

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Artificial intelligence (AI) has become one of the most disruptive technologies in recent times, comparable to the rise of the internet and smartphones. As companies across various sectors increasingly focus on AI, certain stocks are gaining attention for their strong positions in AI innovationBelow are three notable stocks from sectors such as retail, software, and semiconductors that are making strides in AI.

Amazon (NASDAQ:AMZN)

Amazon, a dominant player in the retail sector, runs the largest e-commerce marketplace in North America and Western EuropeThe company's vast reach has also allowed it to secure a substantial presence in the digital advertising spaceHowever, Amazon’s cloud computing division, Amazon Web Services (AWS), is where AI presents its most significant potential.

AWS leads the cloud infrastructure and platform services market, with its market share increasing by one percentage point between the first and second quarters of 2024The scale of AWS gives it a unique position in the AI landscape, as its large customer base is likely to rely on AWS for AI services rather than switching to new providersAWS has also expanded its AI offerings with products like the coding assistant Amazon Q and the generative AI development platform Amazon Bedrock.

Amazon’s AI-related businesses are expected to grow further, as indicated by AWS’s impressive multibillion-dollar revenue run rateLooking forward, Wall Street analysts project Amazon’s earnings to grow by 25% annually through 2025, largely driven by its cloud computing and AI efforts.

Microsoft (NASDAQ:MSFT)

Microsoft has embraced AI across its software and cloud servicesGenerative AI copilots within its business productivity platforms are seeing significant adoptionThe number of workers using Microsoft 365 Copilot daily nearly doubled in the most recent quarter, and the overall customer base increased by over 60%.

Microsoft Azure, the company’s cloud service, is benefiting from its strengths in cybersecurity, analytics, and AIThrough a partnership with OpenAI, Azure has positioned itself as the only public cloud platform that enables developers to build generative AI applications using the large language models behind ChatGPTThis collaboration has been instrumental in attracting new customers and solidifying Azure’s presence in the AI space.

While Wall Street forecasts Microsoft’s earnings to grow by 13% annually through fiscal 2026, some analysts consider its current stock valuation of 36 times earnings to be relatively high.

Taiwan Semiconductor Manufacturing Company (NYSE:TSM)

Taiwan Semiconductor Manufacturing Company (TSMC) is a leader in the semiconductor sector, serving as a key player in the production of advanced chipsTSMC's leadership in process technology allows it to continuously improve power, performance, and area (PPA), while reducing costs and time to marketThis has positioned TSMC as a go-to partner for major tech companies involved in AI development.

TSMC has high-profile customers, including Apple, Nvidia, AMD, Qualcomm, and BroadcomThese companies are at the forefront of AI development and rely on TSMC’s cutting-edge chips for their productsTSMC’s ability to outspend competitors in research and development has ensured its leadership in the semiconductor market, enabling it to charge premium prices for its services.

With AI becoming increasingly integral to tech innovation, TSMC is expected to maintain its dominance in the semiconductor industry.

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