Investing great Peter Lynch steered Fidelity Magellan from a fund with $20 million in assets under management ( AUM ) to $14 billion in AUM in just 13 years years. That’s a compounded annual growth rate greater than 29% and why he is considered a stock market legend. While Lynch may be a legend, that doesn’t mean that AI isn’t slowly becoming a savvy stock predictor as well.
In face, there are stocks that AI predicts may become 10-baggers. Combing through the universe of stocks looking for ones that could grow to 10 times my initial investment is daunting. So why not enlist the help of artificial intelligence? It can sort through millions of data points in seconds and spit out stocks that meet your criteria.
I turned to Microsoft ‘s (NASDAQ: MSFT ) CoPilot (formerly Bing Chat) because it’s the one place you can use the latest version of ChatGPT for free. GPT-4 is the more powerful and more accurate version of OpenAI’s chatbot. While I still wouldn’t trust AI to make my investment decisions for me, here are the three stocks AI thinks can be 10-baggers in 10 years.
Nvidia (NVDA) To no one’s surprise, Nvidia (NASDAQ: NVDA ) tops the list of stocks the can increase 10 times over the next decade. If it maintains last year’s pace it will happen a heckuva lot sooner. The chipmaker more than tripled in value in 2023 and was largely responsible for the gains made by the S&P 500 .
Nvidia was the fifth largest and second most influential component in the index behind Tesla (NASDAQ: TSLA ). The stock is already up 10% in 2024. If Nvidia can achieve this feat it will be because of AI.
It is the leading chipmaker specializing in the kinds of technology needed for AI to process all the data required by supercomputers and data center infrastructure. Nvidia’s HGX with InfiniBand platform is already running most generative AI applications , including ChatGPT and CoPilot. Others include Adobe ‘s (NASDAQ: ADBE ) Firefly, ServiceNow ‘s (NYSE: NOW ) Now Assist, and Zoom Video ‘s (NASDAQ: ZM ) AI Companion.
I’ve suggested Nvidia is priced for perfection and any sort of hiccup with AI’s adoption could send NVDA stock lower. However, a really good argument can be made that for a company like Nvidia that is on a long-term trajectory higher, waiting to buy is immaterial. The few dollars per share you’ll gain by holding off on buying now will be inconsequential if it achieves 10 times your original investment in 10 years.
Nio (NIO) Chinese electric vehicle ( EV ) maker Nio (NYSE: NIO ) is another stock CoPilot picked to generate massive returns for investors. It is developing a portfolio of smart vehicles that blend the best of EV and autonomous vehicle capabilities. As a fast-growing EV maker in the world’s largest EV market while expanding sales to other markets, it seems like an easy pathway for growth.
Yet I’m hesitant about recommending Nio stock. It is cutting prices on its vehicles like most other manufacturers, new trade restrictions with China means entering the United States market won’t be easy, and it’s cutting jobs to conserve cash. Nio produces losses on every car it makes and those losses are widening.
The United Arab Emirates sovereign fund infused it with more than $3 billion in cash. The Middle East is shaping up to be an important market for EVs. Countries there are trying to diversify away from oil as their primary revenue source.
Saudi Arabia is similarly investing heavily in Lucid Group (NASDAQ: LCID ). Nio has its battery-swap business to lean on but wants to spin it off to focus on making EVs profitably. Batteries-as-a-service is a model other EV makers could use to overcome buyer concerns about limited driving distances.
Nio can swap out a battery in three minutes. If NIO stock is going to grow 10 times your initial investment it’s off to a rocky start. It lost 10% last year and is down more than 20% year to date.
It’s one reason why I think you can’t outsource your investment decisions to AI. Salesforce (CRM) But I do think Salesforce (NYSE: CRM ) is a good pick to mint millionaires . It is using AI to transform “from being not only the number one CRM, but to the number one AI CRM.
” Because of AI, CEO Marc Benioff says Salesforce is now the third-largest enterprise software company in the world by revenue behind Microsoft and Oracle (NYSE: ORCL ). This was achieved despite 2023 not being a great year for cloud software stocks . Global IT spending fell below 20% for the first time last year and fell to 16% in the third quarter.
Analysts at Canalys, however, suggest the market has finally stabilized and AI will be the primary driver going forward. AI is already offsetting most of the decline in traditional cloud spending. That will only accelerate as enterprises pick up the pace of investing in new AI strategies.
It was AI that drove CRM’s Q3 revenue 11% higher while widening adjusted operating margins from 19. 9% to 31. 6%.
Salesforce is also investing in other AI businesses to help them grow. Its $500 million Salesforce Ventures takes stakes in unique small AI startups such as Anthropic , Cohere , and Hugging Face . Salesforce was the best-performing stock on the Dow Jones Industrial Average last year and is rising again this year.
The customer relationship management outfit’s total return over the past decade has nearly quadrupled in size. With AI pushing it forward, it could readily grow 10 times in 10 years. On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
The opinions expressed in this article are those of the writer, subject to the InvestorPlace. com Publishing Guidelines. .
From: investorplace
URL: https://investorplace.com/2024/01/3-stocks-that-ai-predicts-will-be-10-baggers-in-10-years/
