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Here Are 2 “AI Five” Stocks to Buy Right Now. Forget FAANG and the “Magnificent Seven.”

Artificial intelligence (AI) is reshaping the stock market, leading to a change in the lineup of top-performing stocks. While the U.S. stock market consistently reaches new highs over time, the specific stocks driving this growth can vary. Wall Street often groups these leading stocks together for easier identification. For example, we’ve seen the FAANG stocks (Facebook, Apple, Amazon, Netflix, and Google, now Meta Platforms), and more recently, the “Magnificent Seven” identified by Bank of America analyst Michael Hartnett.

However, in 2024, there’s a new player in town. With Tesla facing challenges and its stock performance slowing down, there’s a call to reassess the market’s leadership. Analyst Glen Kacher from Light Street Capital suggests focusing on AI-related stocks, leading to the emergence of what he calls the “AI Five.” This group includes Nvidia, Microsoft, Taiwan Semiconductor Manufacturing, Advanced Micro Devices (AMD), and Broadcom.

Among these, Advanced Micro Devices (AMD) stands out as a top pick in the semiconductor sector. Its new MI300 data center chips, designed to handle AI workloads, are poised to challenge Nvidia’s offerings. AMD’s strong performance in the fourth quarter and bullish sales forecast for the MI300 indicate promising growth prospects in 2024, especially with the increasing demand for AI processing.

Broadcom, often overlooked compared to AMD and Nvidia, is also making significant strides in the AI field. With a diverse portfolio and strategic acquisitions like VMware, Broadcom is well-positioned to benefit from the growing demand for AI infrastructure. Its high-bandwidth switch, Tomahawk 5, is designed to speed up AI and machine learning tasks, further solidifying its position in the market.

In summary, both AMD and Broadcom offer compelling investment opportunities in the AI sector. While AMD leads in semiconductor innovation and market share growth, Broadcom’s strategic acquisitions and developments make it a key player in AI infrastructure. With the AI market poised for significant expansion, these stocks present potential for strong returns in 2024 and beyond.

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