3 Top Artificial Intelligence Stocks to Buy in November

Investors will likely remember 2023 as the year artificial intelligence (AI) hit its stride. After a brutal sell-off in 2022, AI served as a catalyst that brought many investors back into tech stocks.

Now, in November, some of these stocks have resumed the momentum from earlier in the year. Because of those increases, AI stocks like Advanced Micro Devices (AMD 2.37%), CrowdStrike (CRWD 2.03%), and Palantir (PLTR 3.73%) could serve investors well now and into 2024.

1. AMD

Admittedly, AMD may seem like a strange choice, given the dominance of Nvidia in the AI chip space. Due to Nvidia's market lead, the recent release and the upcoming ramp of AMD's MI300 chip may seem like a move that is too little, too late in terms of competing.

However, AMD has a history of catching up and sometimes surpassing rivals, and the MI300 chip has shown signs of early success. CEO Lisa Su said on the Q3 2023 earnings call it could bring about the fastest ramp to $1 billion in sales for a specific AMD product in company history.

Indeed, AMD's financials seem to reinforce this sentiment. After recent declines, revenue in the third quarter of 2023 was $5.8 billion, rising 4% from year-ago levels.

Moreover, operating income turned positive. That led to Q3 net income of $299 million, a 353% increase from the $66 million in the same quarter last year.

That subsequent recovery may have helped the stock surge higher by 75% in 2023. Also, investors can buy shares at a comparative bargain, since Nvidia's massive 33 price-to-sales (P/S) ratio is well above the sales multiple of 8 for AMD. As the adoption of MI300 chips continues to grow, AMD stock should continue to rise along with the company's AI capabilities.

2. CrowdStrike

One area that has made extensive use of AI is cybersecurity, and CrowdStrike is in an excellent position to capitalize on the technology. Investors know the company best for endpoint security and leveraging crowdsourced data to identify potential attackers. But CrowdStrike also describes its Falcon security suite as an "AI-native" platform, delivering what it calls "the world's most advanced protection" from today's threats.

To that end, the company introduced Charlotte AI in May, a generative AI solution that uses what it deems "high-fidelity" security data. The software continuously improves the system using CrowdStrike's experts, threat hunters, and its operators pertaining to managed detection and response.

And despite some slowing in cloud spending, CrowdStrike managed to grow its quarterly revenue to $732 million in the second quarter of fiscal 2024 (ended July 31), a 37% yearly increase.

Over time, the company has pared operating losses, so much so that it managed an $8.5 million net income in fiscal Q2. About $37 million in interest income compensated for the $15 million operating loss, allowing CrowdStrike to turn profitable.

Thanks to such improvements, the stock is up over 82% this year. And since its 17 P/S ratio is coming off record lows, investors can still buy while the stock is comparatively inexpensive.

3. Palantir

Another company making massive technical gains with AI is Palantir. The use of the technology is nothing new to the big data company, as AI and machine learning deliver insights through an end-to-end deployment infrastructure combined with enterprise data foundations.

Building on that foundation, Palantir recently released a platform based on generative AI called AIP, which has allowed the company to make considerable strides in helping customers.

On its Q3 2023 earnings call, Palantir cited clients using AIP that achieved more in a day than they would have in months without the technology. And despite its release in Q2, over 140 organizations will have completed its AIP boot camp by the end of November, so adoption has occurred quickly.

It is unclear how AIP affected financials, but revenue in Q3 of $558 million grew 17% versus the same quarter last year. Also, Palantir turned an operating profit, allowing it to earn $73 million in net income, up from a loss of $124 million in the year-ago quarter. With those earnings, it managed its fourth consecutive quarter of generally accepted accounting principles (GAAP) profit amid improving financials.

Additionally, with the anticipation surrounding AIP, Palantir stock has risen over 195% this year. Consequently, its P/S ratio has risen to an elevated level of 19. Nonetheless, with the productivity gains achieved by AIP's clients, Palantir has likely positioned itself to command such premium valuations.