5 Best AI Stocks For 2023

In this article, we discuss 5 best AI stocks for 2023. If you want to see more stocks in this selection, check out 12 Best AI Stocks For 2023. 

5. Accenture plc (NYSE:ACN)

Number of Hedge Fund Holders: 6302:54

Accenture plc (NYSE:ACN) is an American-Irish professional services company that provides strategy, consulting, technology, and operation services worldwide. The company specializes in data management, data democratization, and industrialized solutions comprising turnkey analytics and artificial intelligence solutions, metaverse, and sustainability services. It is one of the best AI stocks to invest in. 

On January 30, Jeff Cantwell, an analyst at Wells Fargo, assigned Accenture plc (NYSE:ACN) an Equal Weight rating with a price target of $289, despite having a favorable view of the company’s platform and services. Wells Fargo believes that clients are becoming more cautious about technology spending and will wait for stronger demand before becoming more constructive. Wells Fargo’s 2024 revenue forecast is 2% below consensus as the firm expects clients to focus more on cost containment due to the evolving demand environment.

According to Insider Monkey’s fourth quarter database, 63 hedge funds were long Accenture plc (NYSE:ACN), compared to 58 funds in the prior quarter. GuardCap Asset Management is the biggest stakeholder of the company, with 1.4 million shares worth nearly $387 million. 

Here is what Distillate Capital has to say about Accenture plc (NYSE:ACN) in its Q3 2022 investor letter:

“The largest new purchases include Accenture plc (NYSE:ACN). Accenture modestly lagged the market last quarter and became similarly attractive enough to warrant ownership. Similar to our prior presentations, one way to visualize the current portfolio and note recent changes versus the benchmark is to look at scatter plot of all of Distillate’s FSV holdings versus those in the benchmark with valuation on the vertical axis and free cash ϲow stability on the horizontal axis.”

4. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 106

NVIDIA Corporation (NASDAQ:NVDA) is a California-based provider of graphics, computing, and networking solutions in the United States, Taiwan, China, and internationally. NVIDIA DRIVE PX2 is an open AI car computing platform that allows automakers and their tier 1 suppliers to speed up the production of autonomous vehicles. The platform can be scaled from a small, power-efficient module for AutoCruise capabilities to a high-performance AI supercomputer that can handle autonomous driving. It is one of the premier AI stocks to monitor. 

On February 23, Evercore ISI analyst C.J. Muse raised the firm’s price target on NVIDIA Corporation (NASDAQ:NVDA) to $300 from $245 and reiterated an Outperform rating on the shares after the company reported better-than-expected results for the January quarter and an “even better outlook” for the April quarter. The analyst believes that NVIDIA Corporation (NASDAQ:NVDA)’s data center revenues will continue to grow throughout the entire year of 2023, which should be well-received by investors who were concerned about decelerating data center demand and the possibility of a revenue guide down for April.

According to Insider Monkey’s Q4 data, Matrix Capital Management is a significant position holder in NVIDIA Corporation (NASDAQ:NVDA), with 5 million shares worth $741.3 million. Overall, 106 hedge funds were bullish on NVIDIA Corporation (NASDAQ:NVDA), up from 89 funds in the prior quarter. 

O’keefe Stevens Advisory made the following comment about NVIDIA Corporation (NASDAQ:NVDA) in its Q4 2022 investor letter:

“The market and our portfolios had a challenging year as interest rates rose, and deteriorating fundamentals cut our largest position, NVIDIA Corporation (NASDAQ:NVDA), in half. Since our initial purchase in 2013, NVDA has seen its stock decline 50% one other time, back in 2018. The best-performing businesses and stocks do not go up and to the right. Mr. Market gets moody, and even one of the highest quality companies in the world is not immune. Drawdowns of this magnitude are challenging to stomach, even though the stock is up 50x in less than ten years. While we consider ourselves old school value investors, we continue to hold this fantastic company even though, optically, it does not appear cheap. Our confidence in Jensen remains, and while gaming is no longer in hyper-growth mode, the Data Center segment continues to grow. AI, Automotive, and other small but rapidly growing industries are the next leg of the story. Chris Mayer discusses the position in greater detail with commentary from our CIO, Peter O’Keefe. Click here to read the article.”

3. Meta Platforms, Inc. (NASDAQ:META)

Number of Hedge Fund Holders: 194

Meta AI is an AI research lab owned by Meta Platforms, Inc. (NASDAQ:META). Its main goal is to improve augmented and artificial reality technologies through the development of various forms of artificial intelligence. Unlike Facebook’s Applied Machine Learning (AML) team, which concentrates on practical applications of its products, Meta AI is an academic research lab dedicated to generating knowledge for the AI community. Meta Platforms, Inc. (NASDAQ:META) is one of the best AI stocks to invest in. 

On February 21, Bank of America expressed interest in Meta Platforms, Inc. (NASDAQ:META)’s new subscription service, Meta Verified, which was announced on February 19 for Facebook and Instagram. BofA believes that Meta Platforms, Inc. (NASDAQ:META) has the potential to reach 12 million subscribers by the end of 2023 or early 2024. Despite some limitations, BofA believes that Meta may perform better than its peers in terms of subscriber growth, given its wider audience reach and larger revenue opportunities for creators. BofA also noted that Meta Platforms, Inc. (NASDAQ:META) is taking aggressive action to increase earnings in the year of efficiency. As a result, BofA maintained its Buy rating and $220 price target on Meta’s shares.

According to Insider Monkey’s fourth quarter database, 194 hedge funds were long Meta Platforms, Inc. (NASDAQ:META), compared to 177 funds in the prior quarter. Boykin Curry’s Eagle Capital Management holds a $1 billion stake in the company. 

ClearBridge Large Cap Value Strategy made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its Q4 2022 investor letter:

“We also initiated and subsequently added to a position in Meta Platforms, Inc. (NASDAQ:META) following a 70% year-to-date decline in its shares. Meta shares derated materially in 2022 as revenue growth slowed due to tough comps versus a strong e-commerce environment during COVID-19, privacy changes put in place by Apple, and the meteoric rise of rival social media platform TikTok. The company’s valuation declined to a compelling 10x consensus 2023 earnings, which in our view materially undervalued its long-term earnings and free cash flow generation potential. Despite current revenue headwinds, we believe Meta’s massive platform reach should allow it to continue to attract engagement, a metric that appears to be accelerating with the launch of its short-form video product “Reels”. The company’s ability to target potential customers is also set to improve, driven by large investments in artificial intelligence and improved analytical tools to navigate Apple’s privacy policies. We also welcome the company’s increasing financial discipline, including reining in both capex and opex, which should sustain the company’s high underlying profitability and gain back investor confidence. Meta has also done a good amount of work to improve its social media platforms Facebook and Instagram and has best-in-class practices designed to reduce hate speech and improve privacy.”

2. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 240

Amazon.com, Inc. (NASDAQ:AMZN) focuses on e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence. Amazon Web Services (AWS) offers the most complete set of artificial intelligence and machine learning services to meet business needs. The company reported a Q4 revenue of $149.2 billion, up 8.6% year-over-year, beating Wall Street estimates by $3.43 billion. Amazon.com, Inc. (NASDAQ:AMZN) is one of the best AI stocks for 2023. 

On February 14, Loop Capital analyst Rob Sanderson maintained a Buy rating and a $140 price target on Amazon.com, Inc. (NASDAQ:AMZN) after analyzing the Q4 results. The analyst believes that the company’s retail business has made significant progress towards improving unit economics, except for some non-recurring charges such as employee severance, impairment charges, and increased insurance liabilities.

Among the hedge funds tracked by Insider Monkey, 240 funds were long Amazon.com, Inc. (NASDAQ:AMZN) at the end of December 2022, compared to 269 funds in the prior quarter. Harris Associates is a prominent stakeholder of the company, with 19.3 million shares worth $1.6 billion. 

Diamond Hill Large Cap Strategy made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2022 investor letter:

“At Amazon.com, Inc. (NASDAQ:AMZN), recessionary and inflationary headwinds drove weaker demand and higher costs for its AWS (Amazon Web Services) and retail businesses. While over investment in the retail business during the pandemic and continued growth of investments in AWS could lead to near-term pressure on profitability, we believe Amazon’s competitive advantages will continue to grow and that the business has the potential to grow much faster than the overall economy in the coming years.”

1. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 259

Microsoft Corporation (NASDAQ:MSFT) on February 22 unveiled a preview release of its latest Bing and Edge applications for iPhone and Android that feature new functionalities such as voice search and access to its AI chatbot. Additionally, the company revealed the AI-driven Bing for the telecommunications platform Skype. It is one of the top AI stocks to consider. 

According to Morgan Stanley analyst Keith Weiss, Microsoft Corporation (NASDAQ:MSFT)’s EPS growth is expected to accelerate in each of the next five quarters starting from the Q2 low. This is due to easing comparisons, price hikes, reduced foreign exchange headwinds, and decelerating operating expenses. After refining its cloud and overall bottom-up gross margin models, the firm believes that achieving Q3 targets seems possible. While maintaining an Overweight rating and $307 price target on Microsoft Corporation (NASDAQ:MSFT) on February 13, the firm emphasized that there are more things to like about Microsoft Corporation (NASDAQ:MSFT) than AI.

According to Insider Monkey’s Q4 data, 259 hedge funds were long Microsoft Corporation (NASDAQ:MSFT), compared to 269 funds in the prior quarter. Bill & Melinda Gates Foundation Trust is the largest stakeholder of the company, with 39.2 million shares worth $9.4 billion. 

Polen Global Growth Strategy made the following comment about Microsoft Corporation (NASDAQ:MSFT) in its Q4 2022 investor letter:

“In the case of Microsoft Corporation (NASDAQ:MSFT), the company is performing very well. Azure now represents nearly 25% of the total business and continues to compound at a higher rate. Although growth is moderating a bit recently (as it is for AWS and Google Cloud Platform as well), these three platforms collectively generated more than $140 billion in revenue during the last 12 months and are still growing at a healthy rate. Further, Microsoft Cloud, or commercial cloud (which includes Azure and other cloud services, Office 365 Commercial, the commercial portion of LinkedIn, Dynamics 365, and other cloud properties) continues to grow roughly 30% and is now about half the business. Mathematically, commercial cloud could decelerate to 20% growth with all other segments decelerating to zero growth and total company revenue growth would still be at least double digits. We believe Microsoft is positioned to compound underlying earnings per share at a mid teens rate over the next five years. At 22x earnings, we felt the valuation was attractive and that it should be a large position.”

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