Stock Market

3 AI Stocks to Turn $250,000 into $1 Million: January 2024

Artificial intelligence was a great trade in 2023. Stocks in the sector soared while corporations have been in a rush to announce AI initiatives to attract investors.

While some sectors fizzle out after a few years, AI has tremendous staying power. The technology is already incorporated into many websites, apps, and platforms that we regularly use. While 2023 put the technology into the spotlight with the introduction of ChatGPT, this trend has been developing for several years. 

Investors can still cash in on artificial intelligence as it has a tremendous runway. These three AI stocks look enticing at current prices.

Axcelis Technologies (ACLS)

Source: Pavel Kapysh / Shutterstock.com

Not every AI stock is a large-cap company. Smaller companies also play a role and have compelling growth potential. Their size makes them less known to most investors which can lead to better buying opportunities for investors who are in the know.

Axcelis Technologies (NASDAQ:ACLS) fits that description. The company’s ion implantation technology is crucial to produce high-quality AI chips. The company introduced its Purion H200 single wafer high current implanter in 2022 and has been delivering high revenue and earnings growth ever since.

The firm felt confident enough about sales to raise Q4 2024 guidance and reaffirm that full-year sales should exceed $1.1 billion. The stock jumped by almost 5% on the news and has enjoyed a nice multi-day rally.

Unlike the other AI leaders, Axcelis Technologies looks incredibly cheap at the current price level. Shares only trade at an 18 P/E ratio despite rapidly growing revenue and earnings. Net profit margins expanded in 2023 to exceed 20% while revenue grew by 27.6% year over year (YOY).

Shares have dropped by 32% over the past six months for no good reason. Meanwhile, the stock is up by 527% over the past five years and looks poised to reward long-term investors. 

Broadcom (AVGO)

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Broadcom (NASDAQ:AVGO) may be the best dividend growth stock right now. It offers the stock appreciation and dividend growth rate that many investors would dream of. Many investors decided to turn that dream into a part of their portfolios, bidding up the stock by 103% over the past year.

Even with the surge, Broadcom still has a 1.85% dividend yield and raised its dividend by 14.1% YOY to close out 2023. 

Investors have been rewarded for holding onto Broadcom over several years, but what about new investors? The company is still taking strides that can generate meaningful returns. Broadcom’s new AI chip has twice the bandwidth as the company’s market-leading Trident 4-X9 while reducing power by 25%. It’s a more efficient and effective chip that gives the company additional opportunities in 2024.

Broadcom has great products that have managed to get better through technological advancements. The company seems destined to become a trillion-dollar company which would result in a nice gain for shareholders.

Advanced Micro Devices (AMD)

Source: Pamela Marciano / Shutterstock.com

While not as large as Broadcom, Advanced Micro Devices (NASDAQ:AMD) is another leader in the chipmaking industry. The firm has expanded into AI chips and has experienced heightened AI chip demand.

The news prompted Barclays (NYSE:BCS) analyst Tom O’Malley to raise his price target from $120 to $200. The new price target implies close to a 20% upside. KeyBanc analyst John Vinh also hiked his price target from $170 to $195.

Analysts have been in a rush to raise price targets for AMD and other top-performing artificial intelligence stocks. AMD endured some headwinds in 2023 but looks positioned for a strong rally in 2024. 

Even with financial headwinds, the stock still gained 130% over the past year and is up by 642% over the past five years. Momentum can carry this stock to the clouds, and a return to high revenue and earnings growth can justify the rallies that take shape. The stock’s P/E looks excessive as it’s above 1,000 but the company’s 42 forward P/E ratio paints a more valuable perspective.

On this date of publication, Marc Guberti held long positions in ACLS and AVGO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.

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