Are these the top ASX AI stocks to watch?
Read on for a description of AI stocks alongside five of the best artificial intelligence companies to watch in 2024. These are some of the most well-known AI-dedicated shares on the index.
AI boom explained
With AI stocks going mainstream, it’s worth considering just how fast progress is being made. ChatGPT was only launched in late 2022, with GPT-4 following in March 2023.
Now, AI is becoming embedded in entertainment, social media, art, retail, security, sports analytics, manufacturing, self-driving cars, healthcare, and warehousing, alongside dozens of other sectors.
The financial possibilities are arguably essentially endless, as shown by Nvidia’s recent quarterly results: record quarterly revenue of $30.0 billion, up 15% from Q1 and up 122% from a year ago, with CEO Jensen Huang stating that ‘the next industrial revolution has begun – companies and countries are partnering with NVIDIA to shift the trillion-dollar traditional data centres to accelerated computing and build a new type of data centre – AI factories – to produce a new commodity: artificial intelligence.'
Of course, older investors who lived through the dotcom bust may be feeling a distinct sense of déjà vu. While AI is undoubtedly filtering into ever more aspects of daily life and work environments, new tech has a history of inspiring market bubbles which pop before the winners go on to generate sustainable growth. This was arguably the case with the dot-com crash – and while no two scenarios are exactly the same, history does tend to rhyme.
On the other hand, the advances in AI over the last 18 months have been extraordinary – with artificially generated text, imagery, and video available to the masses on a scale never before seen.
There are even rumours that OpenAI has developed a model approximating Artificial General Intelligence (AGI) – capable of surpassing human-like intelligence with the ability to self-teach. And then there’s the employee question: many companies are already laying off staff in favour of AI-based replacements, and this trend could be set to continue.
Most recently, Apple announced a potentially groundbreaking partnership with OpenAI to bring artificial intelligence to the iPhone, which will launch in December 2024.
But with some disquiet not just at Nvidia but also at other popular shares, including Super Micro Computer, Palantir, ARM, and AMD, it remains to be seen whether this is the end of the bubble or simply some profit-taking before a sustained move higher.
As ever, while there may be significant growth opportunities, there are also risks.
Top ASX AI stocks to watch
The following are five well-known AI-dedicated shares on the ASX. While market titans like Block or WiseTech Global do use AI in their operations, they are not specifically AI-focused and, therefore, are not included in this list. Indeed, most larger companies are starting to incorporate artificial intelligence to some degree, and a cut-off between what is and what is not an AI company will always be subjective.
Importantly, these ASX AI companies are much smaller and perhaps higher risk than the US operators – but this does mean they may have stronger growth potential. These stocks are ordered by market capitalisation, largest to smallest.
As always, past performance is not an indicator of future returns.
NEXTDC (ASX: NXT)
NEXTDC is Australia’s leading data centre operator, providing high-performance infrastructure to support cloud computing, AI, and other advanced technologies. The company’s state-of-the-art facilities offer secure, energy-efficient environments for data storage and processing, making NEXTDC a critical enabler of the digital economy. With AI applications demanding ever-increasing amounts of data processing power, NEXTDC’s data centres are essential for businesses seeking scalable, high-speed solutions.
What makes NEXTDC a compelling stock for investors is its strategic role in supporting the explosive growth of AI, big data, and cloud technologies. The company’s focus on sustainability, with carbon-neutral operations and renewable energy initiatives, further strengthens its appeal as businesses look for greener tech solutions. With a strong market position and ongoing expansion of its data centre network, NEXTDC is well-positioned to benefit from the rising demand for AI and digital infrastructure – making it a stock to watch in the ASX AI space.
NEXTDC has a market capitalisation of $10.89 billion.
Life360 Inc (ASX: 360)
Life360 Inc is a technology company best known for its popular family safety app, which provides location sharing, driving safety features, and emergency notifications. Life360’s platform uses AI and machine learning to enhance user experiences, particularly in areas like driving analysis, crash detection, and real-time location updates. This integration of AI makes the app smarter and more responsive to user behaviour, offering personalised insights that improve safety for families on the go.
Investors find Life360 attractive due to its rapidly growing user base and subscription revenue model, which drives consistent financial performance. The company’s expansion into global markets and continuous innovation in AI-driven safety features further solidify its competitive edge. As the demand for connected, AI-powered family safety solutions rise, Life360 is well-positioned to tap into this market, making it an intriguing option for investors looking to benefit from AI in consumer technology.
Life360 Inc has a market capitalisation of $4.26 billion.
Dicker Data (ASX: DDR)
Dicker Data is a leading distributor of hardware, software, and cloud services in Australia and New Zealand, with a strong focus on helping businesses embrace digital transformation. The company partners with major tech brands like Cisco, Microsoft, and Dell, offering a wide array of products and services that cater to the growing demand for AI, cloud computing, and cybersecurity solutions. Dicker Data plays a key role in the AI ecosystem by providing the essential infrastructure and tools businesses need to implement AI technologies effectively.
What makes Dicker Data appealing to investors is its solid market presence and consistent revenue growth, driven by the rising adoption of AI and cloud-based technologies. The company’s strong distribution network and strategic alliances position it as a vital intermediary in the tech supply chain. With more organisations looking to integrate AI into their operations, Dicker Data is well-placed to capitalise on this demand, making it a stock to watch for those interested in the AI and tech sectors on the ASX.
Dicker Data has a market capitalisation of $1.71 billion.
Megaport Ltd (ASX: MP1)
Megaport Ltd is a leader in the Network-as-a-Service (NaaS) space, offering scalable cloud connectivity solutions that allow businesses to securely and easily connect to a wide range of cloud service providers. Megaport’s platform enables enterprises to bypass traditional network infrastructure, providing on-demand bandwidth and connectivity through a flexible, user-friendly portal. This approach significantly reduces the time and cost associated with cloud network management, making it an attractive solution for businesses undergoing digital transformation.
What sets Megaport apart is its global reach and ability to integrate with top-tier cloud providers like Amazon Web Services, Microsoft Azure, and Google Cloud. This strategic positioning allows the company to capitalise on the ever-growing demand for cloud services driven by AI, machine learning, and big data applications. Investors are drawn to Megaport for its strong growth trajectory, robust partnerships, and its role as a critical enabler of cloud-based AI infrastructure – key reasons to watch this stock as industries continue to shift towards cloud computing.
Megaport has a market capitalisation of $1.20 billion.
BrainChip (ASX: BRN)
BrainChip Holdings is a standout in the AI space, specialising in neuromorphic computing technology. The company has developed the Akida™ neural processor, which mimics the way the human brain processes information. This cutting-edge technology enables faster, more energy-efficient AI capabilities, which can be embedded directly into devices. BrainChip’s solutions are applicable across various industries, including autonomous vehicles, cybersecurity, and the Internet of Things (IoT), making it a versatile player in the AI landscape.
What makes BrainChip attractive to investors is its pioneering approach to edge AI – bringing advanced AI processing closer to where data is generated, reducing latency and power consumption. With the global push towards more sustainable and efficient technologies, BrainChip’s unique offerings are well-positioned to capture growing demand. As the company continues to refine its products and secure high-profile partnerships, its potential for future growth is a compelling reason for investors to keep it on their radar.
BrainChip has a market capitalisation of $372.05 million.
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