Artificial intelligence (AI) has been part of our lives for years, powering everything from industrial machines to self-driving cars. However, interest in AI surged in November 2022 with the launch of OpenAI’s ChatGPT, a powerful tool capable of tasks like text generation and image creation.
Leading this generative AI trend is Nvidia (NVDA 0.78%), whose stock has skyrocketed over 1,000% in two years, thanks to a massive revenue boost. Nvidia’s advanced AI chips are crucial for today’s AI technologies, making it a top choice for investors.
However, Nvidia’s stock is now considered overvalued. I’m holding some shares but prefer to look for safer AI investments. Here are two stocks worth considering:
| Stock | Two-Year Return | Price-to-Sales (P/S) | Price-to-Free Cash Flow (P/FCF) |
|---|---|---|---|
| Nvidia | 1,050% | 58.4 | 72.4 |
| IBM | 92% | 3.4 | 16.9 |
| UiPath | 5% | 5.1 | 21.6 |
Data as of 10/18/2024 from Finviz.com and YCharts.
IBM: A Strong AI Investment
IBM (IBM -0.29%) is a solid choice for AI stocks. Known for innovations since the ’70s, IBM focuses on enterprise-level AI, providing tools like Watsonx that integrate well with existing business systems.
IBM prioritized quality in developing its AI tools like Watsonx, which has already generated over $2 billion in orders, making it a promising investment.
UiPath: Automation Meets AI
UiPath (PATH 2.27%) specializes in robotic process automation (RPA) software that automates repetitive tasks, making it a valuable asset in any business.
While UiPath’s stock has not performed well, its sales have increased by 32%, and it recently turned a profit, making it an attractive buy as AI integration improves its capabilities.
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