Bay Street Is Betting These Stocks Will Rally Fast

These stocks continue to have a big push from Bay Street, and could rally even further in 2023 as investors latch on.

The TSX today remains full of volatility, as the market quickly rises and falls as investors remain unsure about the immediate future of the markets. It can therefore be difficult to know where to invest, causing many investors to perhaps stay out of it altogether. Yet that’s not necessarily what investors should be doing right now, according to some Bay Street analysts. Especially when it comes to future growth stocks.

There are some growth stocks out there that could rally quite fast, according to Bay Street. Yet if you’re looking for a substantial turnaround, and fast, Bay Street recommends looking at companies involved with artificial intelligence in particular.

exchange traded funds

Image source: Getty Images

Why AI stocks?

It’s not just a trend. AI has become a major part of the way we live and has been for a while whether we want to admit it or not. Whether it’s using hands-free to send messages to your mom, or ChatGPT to come up with an Excel spreadsheet of earnings, AI is involved with every aspect of our world these days.

So it’s no wonder that many investors have sought it out as an investing opportunity. That being said, there are smart ways and risky ways of investing in AI stocks. The risky way, of course, would be to put all your cash in one stock. Whether it’s a large-cap company like Alphabet, or an up-and-comer you’re hoping to turn around, doing this can lead to losses in the short and perhaps even long term.

Which is why when it comes to investing, analysts recommend a different strategy altogether.

Choose a fund

Since exchange-traded funds (ETF) came on the scene, investors can now choose from every type of investment under the sun. Whether it’s high dividend yield and low risk, or high growth and tech stocks, you can use an ETF to get into the exact type of investment you’re looking for.

This is also the case for growth stocks in the AI stock sector. Once you come up with how much cash you’re willing to set aside for this type of venture, you can then use that investment to put it towards an ETF focused perhaps on AI, or perhaps AI along with a few other tech investments.

ZINT ETF

A good option to consider is the BMO MSCI Next Gen Internet Innovation Index ETF (TSX: ZINT). This ETF focuses on innovation in the internet space, including through artificial intelligence. Its top holdings include Nvidia, Microsoft and Meta, among others. So you get access to those trending names, without the massive share price.

The ETF focuses on growth through this trending sector, but also provides the benefit of connecting to the Canadian dollar. So you don’t have to worry about currency conversion. The management expense ratio sits at 0.45%, so you can look forward to a management team watching your investment for you. No risky moves there. Shares are up 26% in the last year, so you already have some growth behind you.

HBGD ETF

Then we have the Horizons Big Data & Hardware Index ETF (TSX: HBGD), which seeks to replicate the Solactive Big Data & Hardware Index. Therefore, it’s passively managed, with a management expense ratio (MER) at 0.55% as of writing.

It too tracks large companies in the data development, storage, and hardware solutions services sector. This includes AI stocks, as well as those involved in cryptocurrency support such as blockchain. It also includes the semiconductor industry, supporting companies that continue to drive growth by addressing the shortage.

If you’re worried about risk, sure the company invests in many smaller companies. Yet not one takes up more than 5% of its total portfolio. It now has a globally diversified set of holdings, with shares up 27% in the last year alone.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Fool contributor Amy Legate-Wolfe has positions in Alphabet. The Motley Fool recommends Alphabet, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.

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