Artificial intelligence (AI) is the big buzzword this year that has ignited a rally in the NASDAQ Composite Index.
The bellwether technology stock index touched an all-time high just earlier this week after breaking past its record high back in 2021.
Investors are looking for scorching hot picks in the AI sector that could generate continued large capital gains.
It is important, however, to stick with companies with a solid track record and market position that can grow sustainably.
Here are four US growth stocks linked to AI that could help your portfolio sizzle in 2024 and beyond.
Meta Platforms (NASDAQ: META)
Meta Platforms needs no introduction, being one of the largest social media companies that owns chat program WhatsApp, social media site Facebook, and video and picture sharing site Instagram.
The company delivered an impressive performance for 2023 with revenue rising 16% year on year to US$134.9 billion.
Operating profit leapt 62% year on year to US$46.8 billion while net profit surged by 69% year on year to US$39.1 billion.
Shares of Meta Platforms have climbed 41.6% year-to-date (YTD) after touching an all-time high of US$504.4.
There could be more to come for investors as CEO Mark Zuckerberg pledges to spend more on computer chips for its future AI roadmap.
Meta Platforms plans to spend billions on Nvidia’s graphic cards to pursue its goal of attaining artificial general intelligence, a futuristic form of AI similar to human-level intelligence.
Zuckerberg also wants to improve cooperation with Samsung Electronics to gather more AI processors and mitigate the risk of over-reliance on TSMC Inc (NYSE: TSM).
At a conference last year, the company presented its generative AI product Meta AI, an advanced conversational assistance based on a large language model (LLM) that will be integrated into its products.
Palantir (NYSE: PLTR)
Palantir uses AI to build and deploy software platforms that serve as central operating systems for its clients.
Like Meta, shares of Palantir have surged 43.6% YTD after touching a 52-week high of US$25.69.
The company reported a strong set of earnings for 2023 that saw it generating its fifth consecutive quarter of profitability.
Revenue for 2023 rose 16.7% year on year to US$2.2 billion.
The business generated an operating profit of US$120 million for the year with net profit coming in at US$209.8 million after being boosted by a more than sixfold year-on-year increase in interest income.
Palantir closed 103 deals above US$1 million, around double what it closed a year ago.
The company also generated a positive free cash flow of US$697 million, more than a threefold year on year increase.
Billings for the business jumped 56% year on year to US$605 million for the fourth quarter of 2023 while its US commercial customer count climbed an impressive 55% year on year to 221.
Adobe (NASDAQ: ADBE)
Adobe is a software company offering a platform for users to tap AI to generate creative graphics and digital experiences.
Shares of Adobe are down 6.1% YTD but the software company reported a strong set of earnings for fiscal 2023 ending 1 December 2023.
Revenue rose 10.2% year on year to US$19.4 billion while operating profit increased by 9.1% year on year to US$6.7 billion.
Net profit improved by 14.1% year on year to US$5.4 billion.
The business also generated close to US$7 billion of free cash flow for its fiscal 2023.
Just last month, Adobe announced that it will build conversational AI into trillions of PDF documents as part of a beta release.
This release is a first step in incorporating generative AI for consumption and creation, while also allowing the ability to query the document to obtain better replies.
The full range of AI capabilities will be offered through an add-on subscription plan once this beta is over.
Nvidia (NASDAQ: NVDA)
Nvidia is the poster child for the AI revolution and is famous for inventing the graphics processing unit (GPU) that is used by personal computers, robots, and self-driving cars.
Its shares have surged by 78.5% YTD and recently hit a new all-time high of US$876.9, giving the company a market capitalisation of US$2.1 trillion.
The company announced a sparkling set of earnings for fiscal 2024 (ending 28 January 2024) and offered strong guidance.
Revenue more than doubled year on year to US$60.9 billion.
Operating profit soared sevenfold year on year from US$4.2 billion to US$33 billion.
Net profit catapulted more than sixfold year on year to US$29.8 billion.
The business generated significantly more free cash flow in FY2024 at US$27 billion versus just US$3.8 billion a year ago.
CEO Jensen Huang said that accelerated computing and generative AI have hit a “tipping point” with demand surging across companies and industries.
Nvidia offered revenue guidance of US$24 billion for 1Q FY2025, which if achieved, represents a more than tripling of the US$7.2 billion attained in 1Q FY2024.
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Disclosure: Royston Yang owns shares of Meta Platforms and Adobe.
